Digital Transactions Authoritative, insightful and timely information for payments professionals
Cryptocurrency—or, as some prefer to call it, digital currency—has always carried with it a whiff of illegitimacy, as if something nefarious is going on with those blockchains. There’s no substance to any of this, but the companies that manage the business are nonetheless keen to advance crypto into the mainstream of payments. Not for the sake of legitimacy but for the sake of profit growth.
In that light, it came as no surprise last month when Circle Internet Group Inc. said it wanted to start a bank. Founded in 2013, Circle has grown into one of the most prominent players in digital currency, most especially in stablecoins. And, as chronicled by this magazine and other sources, stablecoins have stolen the headlines lately as mainstream players look to adopt the tokens, which are digital representations of fiat currencies like the dollar. As we went to press, the House of Representatives was on the brink of sending to the President a bill that would set out clear rules for stablecoin commerce.
Circle has applied to the Office of the Comptroller of the Currency to form a national trust bank, specifically, the First National Digital Currency Bank N.A. The effort appears to be the first by a front-rank cryptocurrency issuer in the U.S. market and represents only the latest move by a digital-currency firm to bring crypto money into mainstream financial services.
If approved, the bank will oversee Circle’s management of the reserve for its USDC stablecoin under oversight by the Office of the Comptroller of the Currency. It will also offer custody services for digital assets offered by institutional customers, Circle says.
With its own bank, “we will align with emerging U.S. regulation for the issuance and operation of dollar-denominated payment stablecoins, which we believe can enhance the reach and resilience of the U.S. dollar, and support the development of crucial, market neutral infrastructure for the world’s leading institutions to build on,” said Jeremy Allaire, Circle’s cofounder, chairman, and chief executive, in a statement at the time.
Circle’s move to start a bank is not the first by a digital-currency player, but represents a major step toward establishing stablecoins as a widely used and accepted form of money. Still, moves toward forming a bank have been relatively rare among cryptocurrency issuers and exchanges, and the process can take years. Anchorage Digital formed Anchorage Digital Bank in 2021. Paxos applied for a national banking charter in the same year and won conditional approval from the OCC, but its application expired in 2023.
It’s clear crypto—or, at any rate, stablecoins specifically—are moving close to mainstream interest and, ultimately, mainstream use.
—John Stewart, Editor john@digitaltransactions.net
