Circle Internet Financial Ltd has revealed that it is currently seeking to obtain a federal banking license with the U.S. Office of the Comptroller of the Currency (OCC) in order to expand the services available to the company’s customers. It also hopes to pursue registration with the U.S. Securities and Exchange Commission (SEC) as a brokerage and trading venue, which would allow the company to facilitate the trading of tokens deemed to comprise securities.
Circle Seeks to Become First Crypto Firm with Federal Banking License
If successful, Circle would become the first cryptocurrency company to hold a federal banking license. Jeremy Allaire, Circle’s CEO, stated that such a license would allow Circle to hold customer funds in both digital coins and fiat currency, as well as “hold reserves with the Federal Reserve, natively access the central banking system without intermediaries, and directly settle with other banks in other markets around the world through those networks – that can improve the efficiency of what we deliver and reduce costs.” Circle has already conducted preliminary discussions with the OCC regarding potential banking functions.
Pursuing SEC and Finra Registration
Circle indicated that it expects to submit for SEC licensing as a brokerage and trading venue before applying to the OCC for a banking license. SEC registration would allow Circle to legitimately facilitate trading in cryptocurrency assets that are considered securities. The company has engaged with SEC staff and officials from the Financial Industry Regulatory Authority (Finra). As of this writing, the OCC, SEC, and Finra have not publicly commented on Circle’s ambitious plans.
Shaping Standards for Crypto Asset Custody
In seeking a banking license, Circle aims to influence the practices and standards surrounding holding cryptocurrencies. “The regulators need to figure this out because eventually other banks that they regulate are going to want to hold crypto,” Allaire said. “They’re going to need to have rules for this. We can be a great guinea pig.” Currently, norms for crypto asset custody are still evolving, and Circle’s initiative could set a precedent for the entire industry. Industry observers note that success would significantly enhance Circle’s integration with the traditional financial system, reduce reliance on third-party banks, and likely prompt other crypto companies to follow suit. However, the process involves complex compliance reviews, particularly regarding the SEC’s classification of security tokens.