Circle Wins Approval of Its Banking Plan – Digital Transactions

Circle Internet Group Inc. said its plan to establish First National Digital Currency Bank, N.A., has been approved by the Comptroller of the Currency. The bank’s operating name will be Circle National Trust. Circle submitted its banking application June 30 last year and received conditional approval in December.

The move into banking by Circle, a major stablecoin platform, represents the latest example of a trend in which payments players are seeking direct access to a broad array of financial services through acquisitions or startups of financial institutions.

Circle’s venture into bank ownership will allow the New York City-based company to offer custody services for digital assets directly through Circle and affiliated entities, “depending on demand” and “focusing on banks and other financial institutions,” the company says in its business plan. The charter could also embrace management of Circle’s USDC Reserve, the company says, which would entail federal regulatory oversight of that operation and strengthen “safety, transparency, and trust” for the stablecoin, Circle says.

Circle’s move also comes as stablecoins have gained prominence in financial circles in recent years as payment tokens for such businesses as cross-border payments. They also hold promise for fast settlement of ordinary consumer transactions, rendering government supervision a key building block for user trust.

 “Federal oversight of our trust bank sets a new standard for transparency, governance, and scale for Circle’s infrastructure and unlocks a new phase of adoption, where leading financial institutions can build on public blockchains with clarity and confidence,” said Jeremy Allaire, Circle’s cofounder, chairman, and chief executive, in a statement.

Globally, Circle ranks second among stablecoin issuers, with its USDC token standing at approximately $75 billion in market capitalization, according to CoinMarketCap. Tether Ltd. holds the top rank, with a market cap of $183 billion.

Circle last month said it had agreed to acquire Cybavo, a Taiwan-based developer of tools for digital-asset custody and blockchain development, for undisclosed terms. The move is expected to boost adoption of USDC as governments and businesses are eyeing digital versions of national currencies.