Circle Internet Group (Nasdaq: CRCL), the stablecoin issuer behind USDC, said today that it has received federal approval to operate as a specific type of bank.
The move marks a major milestone in the further legitimization of digital assets like cryptocurrencies. But don’t expect to be opening a Circle checking account anytime soon. Here’s what you need to know.
What’s happened?
Today, Circle Internet Group announced that it has received approval from the U.S. Office of the Comptroller of the Currency (OCC) to operate as a national trust bank. The OCC is an independent division of the U.S. Treasury, and its role is to oversee and regulate all national banks.
As Circle notes, the OCC’s approval and its designation as a national trust bank represent “a major U.S. regulatory milestone” for USDC, the world’s largest regulated stablecoin.
Not only does the consent give Circle the highest level of institutional credibility it can receive—the OCC’s stamp of approval—it brings Circle’s regulation under a federal umbrella, meaning the company, acting as a national trust bank, doesn’t have to worry about complying with a patchwork of regulations across all 50 individual states.
Circle CEO Jeremy Allaire said the move “marks a defining step in bringing blockchain technology and digital assets into the core of the U.S. financial system.”
“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,” he added.
Circle isn’t a commercial bank
However, it’s important to note that Circle hasn’t been granted approval to operate as a traditional, commercial bank.
A commercial bank is the type where you have your checking and savings accounts. Such banks can take deposits, lend money, and offer mortgages and car loans.
A national trust bank, on the other hand, cannot take deposits, offer checking or savings accounts, or provide mortgages or other commercial loans. Instead, it offers fiduciary services, such as asset management. In Circle’s case, its national trust bank will offer digital asset custody services.
Circle also says that the OCC’s charter allows it to expand its capabilities in the future, including managing the USDC Reserve.
What is Circle’s national trust bank called?
Circle’s OCC charter establishes the First National Digital Currency Bank, N.A.
That national trust bank will operate under the “Circle National Trust” name.
How has CRCL stock reacted?
Investors seem to be cheering the news of Circle National Trust.
As of the time of this writing, CRCL shares are currently trading up about 5% to around $66. At one point this morning, CRCL shares surged to above $72 after the news was announced.
However, even with today’s stock price jump, Circle’s shares have had a rough time as of late. Currently, the company’s stock price is down about 14% for the year. Over the past 12 months, CRCL shares have declined about 66%.