Why Circle wants to become a bank

Circle, the issuer of the world’s second-largest stablecoin USDC, is taking a step towards becoming a fully fledged bank.

Why Circle wants to become a bank

The company has filed an application with the Office of the Comptroller of the Currency (OCC) to establish a national trust bank, First National Digital Currency Bank.

If granted, this charter would enable Circle to directly custody and manage the reserves backing its stablecoins, rather than relying on third-party custodians and asset managers.

At present, Circle’s reserves are managed predominantly by BlackRock and held in custody by Bank of New York Mellon.

First National Digital Currency Bank

While USDC is widely viewed as a high-quality stablecoin, its legal structure has not mirrored those of competitors such as Paxos, Gemini, or Ripple’s stablecoin subsidiary, all of which operate under state trust charters.

Without such a structure, Circle’s users remain exposed to legal uncertainties should a token collapse occur – a risk that could impede institutional adoption, one of Circle’s strategic priorities.

“By applying for a national trust charter, Circle is taking proactive steps to further strengthen our USDC infrastructure,” said Jeremy Allaire, Co-Founder and CEO, who also described it as part of building “crucial, market-neutral infrastructure for the world’s leading institutions.”

Beyond enhancing legal certainty, a trust bank structure opens the possibility of direct Federal Reserve access.

Although this is not guaranteed, it remains a major ambition for stablecoin issuers, particularly after Circle’s USDC temporarily de-pegged when Silicon Valley Bank collapsed last year.

Holding cash reserves directly at the Fed, through a master account or reverse repo facilities, would substantially reduce counterparty risk and strengthen dollar parity.

Surge in Share Price

Circle’s move comes amid a dramatic surge in its share price since its recent listing on the NYSE.

Having floated at $31, its stock has soared over 470%, though it opened 2% lower on Tuesday at $181.

Analysts expect Circle to benefit from looming stablecoin legislation, known as the GENIUS Act, which will establish rigorous standards for reserve management and regulatory oversight.

Under this framework, larger stablecoin issuers will fall under OCC supervision – a requirement Circle appears keen to pre-empt.

The legislation is set against a broader push by President Trump to make the US the global “crypto capital”, with Wall Street banks, fintechs, and Big Tech firms now accelerating stablecoin strategies.

Unlike volatile cryptocurrencies, stablecoins function like money market funds, holding dollar-backed reserves to act as a haven from crypto price swings.

Treasury Secretary Scott Bessent recently told lawmakers stablecoin adoption could exceed $2 trillion by 2028, while Bernstein forecasts a $4 trillion global stablecoin market within a decade.

For Circle, becoming a bank is not simply a regulatory checkbox.

It is a strategic play to cement its role at the heart of the emerging internet-scale financial system – a system in which stablecoins are poised to become fundamental rails for payments, settlements, and digital asset tokenisation worldwide.