Circle has recently made a significant move in the digital currency space by applying for a charter to become a federally regulated trust bank. This move would allow Circle to manage USDC reserves and expand its custody services for institutional clients.
The application, submitted to the Office of the Comptroller of the Currency (OCC), seeks approval to operate as a national trust bank under full OCC supervision. If approved, the new entity would be able to hold and safeguard the assets backing USDC for Circle’s US issuer, as well as offer crypto custody services to pension funds, asset managers, and corporate treasurers.
This move aligns with the GENIUS Act, a bill currently in Congress that would require stablecoin issuers to hold segregated reserves in federally regulated institutions. Circle’s CEO, Jeremy Allaire, sees this charter as a significant milestone in their goal to build a transparent, efficient, and accessible internet financial system. The company aims to enhance the reach and resilience of the US dollar by providing market-neutral infrastructure to global institutions.
Circle, which trades on the New York Stock Exchange under the symbol CRCL, reported over $32 billion in USDC circulation at the end of May. This move follows Circle’s issuance of the first New York Department of Financial Services BitLicense in 2015 and its compliance with the EU’s Markets in Crypto-Assets framework last year.
In April, the Abu Dhabi Global Market granted Circle approval to operate as a money services provider, and now the company is extending its licensing strategy to the federal level in the US through the OCC filing. The trust bank will operate as a wholly owned subsidiary of Circle Internet Group, adhering to OCC rules on capital, liquidity, and examinations. While no launch timeline was provided, OCC evaluations of trust charter applications typically take several quarters.
Institutional clients have been pushing for federally regulated custody options for stablecoin issuers, especially as US lawmakers discuss reserve mandates and disclosure standards. By holding reserves at a national trust bank, Circle aims to streamline compliance efforts and reduce counterparty risk for large depositors.
Overall, Circle’s move to become a federally regulated trust bank marks a significant step in the evolution of the digital currency landscape, positioning the company as a leader in providing secure and compliant services to institutional clients.