Circle, the operator of the US Dollar-backed stablecoin USDC, has officially announced its intention to become a federally-chartered commercial bank for cryptocurrencies in the United States.
Jeremy Allaire, CEO of Circle, announced the company’s plans in a recent blog post to become a ‘National Digital Currency Bank’. If successful, Circle will be directly supervised by the Federal Reserve and other agencies operated by the Treasury Department. Allaire explained that the move would allow Circle to directly use the Federal Reserve System and build a more resilient financial system.
Circle had recently published that it will list its shares on the New York Stock Exchange (NYSE). Its aim to become a national bank was highlighted in the listing document “Form S-4” submitted to the US Securities and Exchange Commission (SEC).
Discussing the new initiative, Allaire wrote:
“As we move towards national bank-level regulatory supervision we will begin to publish information about the fundamental liquidity of USDC and our liquidity coverage under Basel III. Similarly, as specific national supervisory standards for dollar digital currencies emerge from the President’s Working Group, we will proactively work with our national regulatory counterparts on the ultimate commercial adoption of new dollar digital currency standards.”
Establishing itself as a National Currency Bank would increase confidence in the company, however, regulatory requirements from the Federal Reserve Board (FRB), the Ministry of Finance, the Office of the Comptroller of the United States (OCC), and the Federal Deposit Insurance Corporation (FDIC) would be much stricter.
Acknowledging such concerns. Allaire wrote:
“However, market observers have correctly focused attention not just on reserve sufficiency and credit quality, but also on fundamental questions of liquidity, including liquidity in times of intense demand to redeem USDC.”
USDC’s current supply ranges to about $27.5 billion and Allaire expects it to grow to hundreds of billions of dollars over the next few years.
The move came amid the recent growing concerns surrounding stablecoins by financial authorities.