Circle has won approval for a U.S.-regulated bank that starts with crypto custody and could later manage USDC▲$0.9999 reserves.
Stablecoin issuer Circle Internet Group has received U.S. approval to launch a bank that could eventually manage the reserves behind USDC, giving the stablecoin issuer more control over its core infrastructure.
The company behind USDC said in a Friday blog post that the U.S. Office of the Comptroller of the Currency approved its plan to establish First National Digital Currency Bank, N.A. The bank will operate as Circle National Trust.
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At launch, Circle National Trust will start by offering crypto custody services for Circle itself and its affiliates. Later, the bank might support reserve management for USDC, bringing more of the reserve operation under direct federal oversight. Circle wrote:
“The charter is also designed to enable future capabilities, including management of the USDC Reserve, which would bring those operations under federal regulatory oversight and further enhance the safety, transparency, and trust of USDC.”
Why Reserve Control Matters
Circle’s reserve setup has been a weak spot before. In March 2023, USDC briefly lost its dollar peg after Circle disclosed that $3.3 billion of its reserves were stuck at Silicon Valley Bank, the failed California lender.
Circle later moved the cash portion of its reserves to Bank of New York Mellon.
While Circle isn’t saying it has already moved USDC reserves into its own bank, over time, Circle National Trust could reduce the company’s reliance on outside banks.
Amid the news, Circle shares soared 13.8% to $71.7 on pre-market trading, per data from Google Finance.
Read more: Expert Warns of Liquidity Risks for Tether and Circle
