Circle is among five crypto firms to get National Trust Charter
The Office of the Comptroller of the Currency (OCC) has given conditional approval for five national trust bank charter applications from crypto firms, including Circle Internet Group (CRCL), Ripple and BitGo.
The five new banks that received approval are Circle's First National Digital Currency Bank, Ripple National Trust Bank, BitGo Bank & Trust, National Association, Fidelity Digital Assets, National Association and Paxos Trust Company, National Association.
Circle is the only one of the crypto native companies that is publicly traded.
A National Trust Bank (NTB) is a federally chartered institution that is focused on services such as custody and asset settlement and fiduciary services, rather than traditional deposit and loan services that are offered by full-service commercial banks.
NTBs essentially create a pathway for fintech and crypto companies to operate in a regulated banking-like structure.
“New entrants into the federal banking sector are good for consumers, the banking industry and the economy,” Comptroller of the Currency Jonathan V. Gould said in a statement.
“They provide access to new products, services and sources of credit to consumers, and ensure a dynamic, competitive and diverse banking system.”
The OCC, which is a bureau of the US Treasury, regulates and supervises all national banks, federal savings associations and the federal branches of foreign banks in the United States.
Gould said that the OCC would "continue to provide a path for both traditional and innovative approaches to financial services to ensure the federal banking system keeps pace with the evolution of finance and supports a modern economy.”
Circle said that its First National Digital Currency bank would oversee the management of its USDC Reserve on behalf of Circle's US issuer. USDC is the world's largest regulated stablecoin and Circle said the establishment of its NTB “represents an important milestone in Circle’s efforts to further strengthen the infrastructure supporting USDC.”
The company noted that its NTB will enhance regulatory oversight of its USDC reserve, while also allowing it to offer fiduciary digital asset custody and related services to institutional customers.
“As a public company, we’re focused on operating under rigorous regulatory oversight and building the infrastructure that allows digital dollars like USDC to become a core part of global finance," Jeremy Allaire, co-founder and CEO of Circle, said in a statement.
"This important milestone will give the world’s leading institutions greater clarity and confidence to build on Circle’s platform as stablecoins and blockchain technology move rapidly into the mainstream.”
Circle's blockbuster IPO in June happened when the entire crypto market was surging, allowing the company to raise over $1 billion in an "upsized" public offering priced at $31. It surged over 124% during its trading debut, making it the largest crypto IPO since Coinbase (COIN) went public in 2021.
However, the company's shares have slumped 7.9% over the past month, due in part to the lockup period on its IPO ending in November, allowing insiders to begin selling off shares.
However, investors also sent the stock lower after management warned that Fed rate cuts would likely pressure returns on Circle's reserve holdings, which are primarily made up of short-term US Treasury bills.
The company's stock is up 9.4% for the year.