Circle Seeks Federal Banking Status for USDC Custody

Circle, the issuer of the world's second-largest stablecoin USDC, has submitted an application to the Office of the Comptroller of the Currency (OCC) to establish a federally regulated national trust bank. The proposed entity, named First National Digital Currency Bank, N.A., aims to oversee the custody of USDC reserves and provide institutional services. This strategic move aligns with the pending GENIUS Act legislation, which seeks to create new regulations for dollar-backed stablecoins.

A federal trust charter would place Circle under direct OCC supervision, similar to traditional financial institutions. This regulatory framework would enable Circle to operate nationwide without the need for individual state licenses, a significant barrier that has hindered the expansion of many digital asset firms. Additionally, the charter would authorize Circle to offer regulated digital asset custody services to institutional clients, joining other federally chartered institutions like Paxos and Anchorage in providing crypto-related services under federal banking regulations.

Circle's application is a proactive response to evolving U.S. cryptocurrency legislation. The company cited the GENIUS Act, which recently passed the Senate and awaits a House vote, as a key motivation for seeking federal banking status. This move reflects Circle's commitment to aligning with emerging regulations for the issuance and operation of dollar-denominated payment stablecoins, aiming to enhance the reach and resilience of the U.S. dollar and support the development of crucial, market-neutral infrastructure for leading institutions.

Circle's CEO, Jeremy Allaire, emphasized the company's proactive approach to strengthening USDC infrastructure. "By applying for a national trust charter, Circle is taking proactive steps to further strengthen our USDC infrastructure," Allaire stated. "We will align with emerging U.S. regulation for the issuance and operation of dollar-denominated payment stablecoins, which we believe can enhance the reach and resilience of the U.S. dollar, and support the development of crucial, market neutral infrastructure for the world's leading institutions to build on."

Circle's move towards federal banking status is part of a broader industry effort to integrate digital assets into traditional financial regulatory frameworks. The OCC, which supervises national banks and federal savings associations, must review and approve Circle's application before the trust bank can commence operations. The agency has granted similar charters to several cryptocurrency firms in recent years, indicating growing regulatory acceptance of digital asset companies operating within established banking structures.

The trust bank designation would specifically help Circle meet anticipated compliance requirements under the GENIUS Act, which aims to create comprehensive regulatory guardrails for dollar-backed stablecoins. This legislation represents Congress's effort to establish clear rules for stablecoin operations while maintaining the dollar's dominance in digital payments. Circle's pursuit of federal banking status signals the cryptocurrency industry's continued integration with traditional financial regulation. If approved, the company's application would establish another precedent for digital asset firms seeking to operate under federal oversight while expanding their service offerings to institutional clients.