Stablecoin developer Circle recently received the green light to operate as a bank. Shares up 5%
Stablecoin provider The circle increased after the U.S. Office of the Comptroller of the Currency, or OCC, gave it permission on Friday to operate as a fiduciary bank, the company said.
The company’s shares were on a high but ended the day up about 5%.
The authorization gives the company the ability to manage reserves directly in its regulated stablecoins, primarily the USDC stablecoin, which has more than 73 billion in circulation. The new bank will operate under the name Circle National Trust. Previously, the Circle required banks and third-party custodians to hold cash and Treasury assets backing the USDC.
The charter does not greenlight the Green Circle to operate as a commercial bank that takes deposits and makes loans.
The news reflects a broader trend in the crypto industry, where companies are trying to make a major shift from financial applications to financial infrastructure. Recent actions by the OCC have included approvals or requests Coinbase, BitGoFidelity Digital Assets, Ripple and Paxos, show the race to own a regulated financial stack.
A trust structure can ease regulatory requirements in other countries, Dante Disparte, Circle’s chief strategy officer, told CNBC.
“We think of ourselves as pioneers in ensuring that – even from the first days of stablecoins entering the trading system – they must follow the principles of trust, transparency, security, compliance with financial crimes and so on,” he said. “Today’s announcement consolidates that at the federal level.”
The charter also gives the Circle a national bank regulator, rather than being subject to state-based regulation — a major pain point for fast-moving startups operating in the heavily regulated financial services industry. Instead of a single rulebook, companies are constantly faced with 50 slightly different ones that not only slow growth but also increase costs.
The stablecoin race has been heating up since the passage of the GENIUS Act nearly a year ago, which established a government framework for stablecoin payments. Under that law, major stablecoin producers like Circle are required to obtain an OCC charter.
As a result, traditional financial companies are increasingly looking to issue their own stablecoins – which presents a growing competitive challenge for USDC – because they can capture the flow of payments, deepen customer relationships and build financial services on top of programmable digital dollars rather than relying on third-party issuers like Circle.
The approval of the OCC charter comes on the same day that global financial messaging network Swift launched a blockchain alliance with 17 banks, including Citi and HSBC, in a 24/7 payments competition to help it compete in the stablecoin race.
And in June, a coalition of more than 140 companies – including Blackrock, Coinbase, Mastercard, Stripe and Visa – joined the new Open USD (OUSD) stablecoin effort, where the yield of the reserve is distributed to participating partners instead of issuing one.
The OCC did not respond to CNBC’s request for comment.
