Banking Authority Contemplates Revoking National Trust Bank's License; Ripple Aims at Accessing Reserves Held by RLUSD Central Bank
In a significant move towards strengthening the regulatory framework and infrastructure of its stablecoin, Circle Internet Group, the issuer of the USDC stablecoin, has applied for a national trust bank charter from the U.S. Office of the Comptroller of the Currency (OCC). If approved, the new bank, named the "First National Digital Currency Bank, N.A.", will operate as a federally regulated trust institution subject to OCC oversight.
The application is currently under review by the OCC, which regulates national banks and federal savings associations, but no approval has been announced yet. If granted, this charter will enable Circle to manage the USDC Reserve on behalf of Circle’s U.S. issuer and offer digital asset custody services to institutional customers.
The impact on USDC’s stability and regulation would be significant. Operating as a national trust bank would subject Circle to rigorous federal supervision by the OCC, enhancing transparency and confidence in the management of USDC reserves. This regulatory status would bring Circle under a traditional banking framework, aligning its operations with existing financial institutions.
The charter would also strengthen the operational infrastructure supporting USDC, potentially increasing its resilience and reliability as a payment stablecoin. Moreover, it would help Circle meet anticipated requirements under the proposed GENIUS Act, a U.S. legislative effort aimed at establishing clear guardrails for dollar-backed stablecoins. This could further legitimize USDC within the broader U.S. financial system.
Circle’s CEO, Jeremy Allaire, emphasized that this move supports building a "transparent, efficient, and accessible" internet financial system, enhancing the reach and stability of the U.S. dollar in digital form and supporting institutional adoption.
Notably, Circle is not incorporated as a trust like fellow regulated issuers such as Paxos, Gemini, and the Ripple subsidiary that issues its stablecoins. However, a trust subsidiary would allow Circle to manage the reserves more directly. If granted a master account, Circle could potentially hold cash reserves at the Federal Reserve.
The granting of a master account may encourage stablecoin issuers to use as much central bank money backing as possible, resulting in fewer or no US Treasuries in reserves. However, the goal of the Trump administration's stablecoin push is not necessarily to include fewer or no US Treasuries in reserves.
The price of Circle's USDC token, listed on the New York Stock Exchange last month, is currently $181, having almost touched $300 since listing. An OCC chartered national trust bank would be considered Tier 2, and would have a better chance of getting a master account.
Circle's proposed structure as an OCC chartered national trust bank could provide a competitive advantage in the stringent review process compared to Tier 3 institutions. Ripple is also aiming to hold central bank reserves, with Standard Custody & Trust, a digital asset-linked firm it acquired last year, being the issuer of Ripple's RLUSD stablecoin. Several other digital asset-linked firms have pending applications for master accounts with the Federal Reserve.
In conclusion, while Circle’s national trust bank charter is still awaiting OCC approval, its granting would materially enhance the regulatory oversight, security, and trustworthiness of USDC, positioning it as a more robust and compliant digital dollar stablecoin integrated into the U.S. financial system.
- If approved by the OCC, Circle's new bank, the "First National Digital Currency Bank, N.A.", will be subject to rigorous federal supervision, enhancing the transparency and confidence in the management of USDC reserves.
- Operating as a national trust bank could potentially increase USDC's resilience and reliability as a payment stablecoin, helping Circle meet anticipated requirements under the proposed GENIUS Act.
- The granting of a master account to Circle could encourage stablecoin issuers to use as much central bank money backing as possible, potentially resulting in fewer or no US Treasuries in reserves.
- Circle's proposed structure as an OCC chartered national trust bank could provide a competitive advantage in the stringent review process compared to Tier 3 institutions, particularly when seeking a master account.
