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Circle has announced its intention to apply for a federal charter as a trust bank in order to manage the reserves of its stablecoins and expand its custodial offerings. This move is seen by many experts as a strategic effort to streamline compliance with the potential passage of the GENIUS Act, which aims to require payment stablecoin issuers to hold segregated reserves within federally regulated institutions.
As part of this ambitious plan, Circle will be establishing a wholly-owned subsidiary that will maintain capital and liquidity according to OCC rules. The new entity is expected to undergo regular examinations by the Office of the Comptroller of the Currency, ensuring utmost transparency and accountability in its operations.
In a statement, Circle’s CEO Jeremy Allaire emphasized the importance of this development in achieving the company’s mission to build an internet financial system that is transparent, efficient, and accessible. By becoming a federally regulated trust bank, Circle will be able to offer custody services to institutional clients seeking stablecoin solutions for their investment portfolios.
The move comes as the USDC stablecoin issued by Circle has seen significant growth in its circulation, reaching more than $32 billion at the end of May. The company believes that achieving federally regulated trust status will not only enhance compliance but also reduce counterparty risk for large depositors.
By obtaining a federal charter, Circle aims to further establish itself as a leading player in the stablecoin market while providing institutional clients with a secure and reliable way to manage their assets.
Source: cryptoslate.com
