Circle, the blockchain firm behind the stablecoin U.S. Dollar Coin, plans to become a full-reserve national commercial bank, the company’s CEO announced in a blog post on Monday.
Circle co-founder and CEO Jeremy Allaire said the company intends to operate under the supervision and risk management requirements of the Federal Reserve, the U.S. Treasury, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC).
The announcement comes a month after Circle revealed plans to go public later this year via a partnership with special purpose acquisition company (SPAC) Concord Acquisition.
"We believe that full-reserve banking, built on digital currency technology, can lead to not just a radically more
efficient, but also a safer, more resilient financial system," Allaire wrote in a blog post. "We are embarking on this journey alongside the efforts of the top U.S. financial regulators, who through the President’s Working Group on Financial Markets are seeking to better manage the risks and opportunities posed by large-scale private-sector dollar digital currencies."
In a statement to Banking Dive, a Circle spokesperson said the company has not yet filed the necessary paperwork with regulators.
"Today’s news is a statement of intent and a signal that the journey has begun. However, we have been preparing for this journey since our founding and recently have accelerated engagement with regulators and public authorities in the U.S. as part of our due diligence to become a full-reserve national commercial bank," the spokesperson said.
The national digital currency bank that Circle is proposing would be the first of its kind, according to CoinDesk.
Other cryptocurrency platforms, such as Anchorage and Paxos have received conditional approvals for national trust charters from the OCC. National trust bank charters do not require deposit insurance.
Other players, such as digital asset bank Avanti and the cryptocurrency exchange Kraken have received special purpose depository institution (SPDI) licenses in the state of Wyoming.
In Circle’s S-4, which it filed with the Securities and Exchange Commission on Friday (SEC) ahead of its planned public offering, it said a U.S. national bank charter would allow it to reduce dependence on third parties.
"[W]e may in the future consider pursuing a U.S. national bank charter or evaluate the acquisition of a national bank," the company wrote in its filing. "This would allow us to access the Federal Reserve System directly, reducing the costs and time for settling transactions."
Circle’s national charter plans, however, could face challenges from Acting Comptroller Michael Hsu, who in June, said he plans to revisit the OCC's past actions regarding crypto-related activities and charter decisions.