Circle's Trust Bank Push Could Reshape Stablecoin Power Dynamics

The financial market has shown increasing interest in Circle Internet Financial, particularly in light of recent legislative and operational developments. On June 17, the U.S. Senate passed the "Guidance and Establishment of the United States Stablecoin National Innovation Act," also referred to as the "Genius Act," with a significant 68 to 30 vote. This legislation aims to create a framework for the regulation and oversight of stablecoins, a key area of financial innovation and risk.

The Genius Act is expected to reshape the market dynamics for stablecoins, particularly for major issuers like Circle. According to estimates from Standard Chartered Bank, the bill could lead to a surge in global stablecoin market value to as high as $2 trillion by 2028. This would significantly expand the market's footprint, potentially positioning stablecoin issuers as major players in the U.S. Treasury securities market. Currently, Tether and Circle hold approximately $166 billion in U.S. Treasuries, and analysts suggest that stablecoin issuers may surpass hedge funds as the third-largest holders of U.S. Treasury securities, following the Federal Reserve and foreign central banks.

Circle's financial performance in 2024 further underscores its growing significance. The company reported total revenues of $1.676 billion and a net profit of $156 million for the year. Based on a post-issuance share count of approximately 223 million shares, this equates to earnings per share (EPS) of $0.70. At the time of its initial public offering, with a stock price of $180, the company's price-to-earnings (P/E) ratio exceeded 250 times, significantly higher than many traditional equities, including speculative assets like泡泡玛特.

In a further step to strengthen its position in the stablecoin industry, Circle has applied to establish a national trust bank in the United States. If approved, it would become the second organization to hold such a charter, enabling direct access to the Federal Reserve's payment system (Fedwire). This access would allow Circle to open a Master Account at the Fed, providing the potential to deposit reserve assets directly with the central bank. This move is seen as a strategic effort to enhance the credibility and transparency of USDC, the stablecoin issued by Circle. It would reduce counterparty risks associated with traditional banking intermediaries and increase the trustworthiness of USDC as a reserve-backed digital asset.

The application for a national trust bank aligns with the Genius Act's broader goals of improving regulatory clarity and enhancing transparency in the stablecoin ecosystem. The establishment of a national trust bank is intended to serve as a custodian for stablecoin reserves, ensuring that the underlying assets are properly safeguarded. Unlike traditional banks, these trust banks would not engage in deposit-taking or lending activities, focusing instead on digital asset custody. This model is expected to increase investor confidence in stablecoins by reducing systemic risks and improving reserve asset oversight.

The combination of legislative support and strategic operational moves has positioned Circle as a leading player in the evolving stablecoin landscape. As the Genius Act moves toward implementation and regulatory frameworks continue to develop, the company is likely to see increased scrutiny but also greater legitimacy in the financial system. Investors, regulators, and market participants are watching closely to see how these developments will shape the future of stablecoins and their role in the broader financial ecosystem.