Circle Wants to Become Chartered Crypto Bank Amid Crackdown
(Bloomberg) -- Circle Internet Financial, the second-biggest stablecoin issuer, is looking to give U.S. regulators even more oversight of its cryptocurrency business as executives at Tether, its larger rival, are said to be facing a criminal probe by U.S. prosecutors.
Circle has set a goal of becoming the first full-service U.S. federally-chartered crypto bank as the skyrocketing value of cryptocurrencies has prompted regulatory concerns of a bubble, which could cause an exodus akin to a run on the banks.
“Over time there will be hundreds of billions of dollars of these types of digital currency in circulation,” Chief Executive Officer Jeremy Allaire said during an interview on Bloomberg Television. “As it grows to that scale, we believe that the right form of supervision is at the federal level.”
U.S. bank chartering is controlled by the Office of the Comptroller of the Currency, which had issued some crypto-friendly charters during the Trump administration. However, the OCC has put the brakes on granting licenses in recent months as regulators seek to come up with a unified policy approach on crypto, casting doubt on Circle’s campaign at least in the near term.
Allaire note the intention of becoming a bank in a blog post Monday, without mentioning when it plans to apply.
An OCC spokeswoman said they don’t have a charter application for Circle and had no additional comment on the company’s goal.
The market value of Circle’s USDC stablecoin -- which is a cryptocurrency linked to an asset such as the U.S. dollar -- has soared to $27.6 billion, up from $3.7 billion last year, making it the second largest of its kind, according to CoinGecko.com. Tether, the largest stablecoin, is reportedly under investigation over whether executives early on had misled banks about transactions linked to crypto, playing into regulators’ concerns about money laundering and unregulated banking systems.
“Market observers have correctly focused attention not just on reserve sufficiency and credit quality, but also on fundamental questions of liquidity, including liquidity in times of intense demand to redeem USDC,” Allaire wrote, saying Circle would exceed current bank standards. “We believe that full-reserve banking, built on digital currency technology, can lead to not just a radically more efficient, but also a safer, more resilient financial system.”
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