Circle will become a \”commercial cryptocurrency bank with full-reserve banking\”, the activities of which will be regulated in accordance with the risk-management requirements of the Federal Reserve System, the U.S. Department of the Treasury, the OCC and the FDIC.
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Circle’s journey to become a national full-reserve digital currency commercial bank: https://t.co/3aNQ0bKPyr
— Jeremy Allaire (@jerallaire) August 9, 2021
Circle’s CEO Jeremy Allaire noted that plans to build around Circle a global digital-asset bank have been in place since the company’s founding.
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In his view, the move to such a structure would strengthen the USD Coin (USDC) stablecoin and enable a more efficient, safer and more resilient financial system.
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“With USDC’s market turnover exceeding $27.5 billion, drawing on our long-standing commitments to trust, transparency and accountability of the dollar reserves backing the stablecoin, we intend to become a commercial bank with a national charter,” Allaire said.
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Circle expects that in the coming years USDC turnover will reach hundreds of billions of dollars. In light of rising demand for stablecoins and to strengthen its self-regulation, the company plans to publish liquidity reports on the asset in line with the Basel III recommendations of the Basel Committee on Banking Supervision at BIS.
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Allaire also stressed that as national standards for supervising \”dollar digital currencies\” emerge, including developed by PWG, Circle will actively work on their adoption.
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USDC is issued by the Centre consortium, managed by Circle in conjunction with the cryptocurrency exchange Coinbase. In July, Allaire’s company disclosed details of the collateral backing the stablecoin: the majority of stablecoins are backed by U.S. dollars, the rest by bonds and other highly liquid assets.
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According to The Block, the market value of all stablecoins in circulation exceeds $81 billion. The leader of the segment is Tether (USDT) with a capitalization of about $32.2 billion. USDC is in second place with $27.9 billion.
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Circle — not the only issuer behind stablecoins seeking licences from national regulators. For example, Paxos holds a conditional license for a national trust bank and plans to obtain a license for a clearing agency.
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In July Circle announced an upcoming reverse merger with SPAC Concord Acquisition Corp. Its securities will be listed on the New York Stock Exchange under ticker CRCL. The company’s value prior to the merger was estimated at $4.5 billion.
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In August the organization announced that to acquire Concord it would conduct a $546 million equity issuance.
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As a reminder, in July Senator Elizabeth Warren called for tougher regulation of cryptocurrencies in the United States. In the same month, Federal Reserve Chair Jerome Powell expressed doubt about the necessity of stablecoins.
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In the same month the U.S. Treasury proposed banning certain stablecoins.