Circle Seeks US Trust Bank Charter to Manage USDC Reserves

Circle, the issuer of the USDC stablecoin, has officially applied for a US trust bank charter with the Office of the Comptroller of the Currency (OCC), signalling a significant step toward tighter regulatory alignment and enhanced transparency. 

Overview

In a statement released Monday, Circle revealed that if the US OCC approves its application, its proposed First National Digital Currency Bank would be permitted to function as a federally regulated trust entity. If approved, the charter would allow Circle to operate as a full-reserve national trust bank, placing it under the direct supervision of US federal banking regulators. This move reflects Circle’s ambition to integrate more closely with the traditional financial system and reinforce trust in its digital dollar reserves. 

It also aligns with the company’s long-standing call for clearer regulatory frameworks for stablecoin issuers. With rising scrutiny from US lawmakers and regulators on how stablecoins are backed and managed, Circle’s application demonstrates an effort to comply with evolving standards proactively. Circle CEO Jeremy Allaire emphasised that the charter would bolster user confidence in USDC’s backing and improve resilience in the broader digital financial ecosystem.

“We believe that full-reserve banking built on digital currency infrastructure can lead to a more efficient, secure, and inclusive financial future,”

Allaire stated.

USDC’s Growing Role in the Financial Ecosystem

USDC, or USD Coin, is the second-largest stablecoin by market capitalisation, with tens of billions of dollars in circulation. It is widely used in crypto trading, cross-border payments, and decentralised finance (DeFi) applications. Circle’s push for a trust bank charter underscores the importance of stablecoin and its increasing role as a bridge between digital assets and traditional finance.

Currently, USDC reserves mix cash and short-term US Treasuries through partnerships with regulated custodians and banks. By obtaining a trust bank charter, Circle would gain the ability to manage and custody these reserves directly under federal banking oversight rather than relying entirely on third parties. This would streamline operations and improve transparency and compliance, two issues often raised by policymakers. As stablecoins become more widely adopted for financial applications, Circle’s regulatory-first approach may serve as a model for other issuers navigating a complex and fast-evolving legal environment in the US.

Regulatory Pressure Pushes Toward Institutionalisation

Circle’s application comes amid heightened scrutiny of the stablecoin industry. US legislators propose bills to regulate reserve transparency, redemption guarantees, and issuer licensing. The Biden administration and various financial agencies have also called for stablecoin issuers to be regulated more like banks, especially given their potential impact on monetary policy and financial stability. Circle is embracing these developments, positioning itself as a trustworthy and compliant operator ready for the demands of a regulated digital economy. 

The company previously received conditional approval for a New York trust license and has partnered with major financial players, including BlackRock and BNY Mellon, to custody and manage USDC reserves. The national trust bank charter would place Circle among a small but growing group of crypto-native firms seeking formal integration into the US financial system if granted. It may also set a precedent for implementing future stablecoin regulation, focusing on transparency, full-reserve backing, and federal oversight.

With this move, Circle aims to reassure users, regulators, and institutional partners that USDC is not just a digital token but a digitally native extension of the traditional US dollar—subject to the same prudential standards as the most trusted financial institutions.