Circle Seeks National Trust Bank Charter for USDC

Circle, the issuer of the USDC stablecoin, has submitted an application to the Office of the Comptroller of the Currency (OCC) for a national trust bank charter. This move is aimed at strengthening the infrastructure of USDC and bringing it under direct OCC oversight, aligning it with the regulatory framework of traditional financial institutions. The proposed trust bank, named First National Digital Currency Bank, N.A., seeks to directly manage Circle's USDC reserves, separating from current custodians. This would allow Circle to offer custody services to institutional customers and meet the requirements under the proposed GENIUS Act.

If approved, Circle’s First National Digital Currency Bank would be authorized to operate as a federally regulated trust institution. This would enable the bank to offer custodial services and operate nationally under the oversight of the OCC, rather than having to apply for individual state-based money transmitter licenses or specific digital currency licenses. National Trust Banks are not permitted to accept cash deposits or issue loans, but they can provide custodial services and operate under federal regulation.

Circle co-founder and CEO Jeremy Allaire stated that this application is a proactive step to further strengthen the USDC infrastructure and align with emerging US regulation for the issuance and operation of dollar-denominated payment stablecoins. The application for a national trust charter is subject to a 30-day comment period, and the regulator usually decides to approve or reject within 120 days after receipt of a complete application.

Circle is not the only crypto firm seeking to establish a national trust bank under the oversight of the OCC. Other firms, including the digital currency wing of financial services giants, are also applying for a national bank charter license from the OCC. Anchorage Trust Company became the first crypto firm to receive a license from the OCC in January 2021, converting into Anchorage Digital Bank.

This move by Circle signifies its commitment to regulatory compliance and its efforts to build a robust infrastructure for USDC. The proposed trust bank would manage Circle's USDC reserves, although some reserves will continue to be held at major banks. This dual approach ensures the stability and security of USDC while providing Circle with the flexibility to innovate and expand its services. The trust bank would also offer custody services for tokenized stocks and bonds onchain, providing institutional customers with a secure and regulated platform to manage their digital assets.

The approval of Circle's application would further strengthen the USDC infrastructure and pave the way for the wider adoption of digital currencies. This development is a significant step in the stablecoin industry, demonstrating Circle's proactive approach to regulatory compliance and its dedication to enhancing the USDC ecosystem. By obtaining a federal trust charter, Circle aims to streamline compliance, reduce counterparty risk for large depositors, and accelerate the adoption of digital currencies and tokenized assets.