Circle to seek US crypto bank charter in ‘near future’

(Bloomberg) – Crypto-payments startup Circle Internet Financial said it was closer to submitting an application to operate as a bank in the United States, advancing a months-old plan even as regulators make more difficult for crypto companies to secure this type of license.

Circle, the issuer of the second-largest stablecoin, revealed plans to become a crypto bank in August and has had ongoing discussions with regulators since then, chief executive Jeremy Allaire said in an interview. He declined to say when the company would submit the request, saying only that it would be “hopefully in the near future.”

The company, which issues USD Coin, is deeply funded. On Tuesday, Circle said it raised $400 million from BlackRock Inc., Fidelity Management and Research LLC and others. The startup plans to go public by merging with a special-purpose acquisition company in a deal valued at $9 billion.

The U.S. Office of the Comptroller of the Currency, which oversees bank charters, has discussed various topics with Circle management regarding the company’s banking ambitions. These include interoperability between blockchains and how to assess the operational risks of a specific blockchain, according to Allaire. A representative for the OCC declined to comment on conversations with Circle.

The risk of connecting different blockchains has been laid bare recently. Hacks involving crypto bridges have totaled over $1 billion in just over a year, including a $600 million attack involving the crypto video game Axie Infinity.

If approved, Circle would be the fourth federally chartered crypto bank in the United States. Those that have obtained at least preliminary approval for a charter include Anchorage Digital, Protego Trust Bank NA, and Paxos Trust Company. Getting a bank charter could be the key to Circle’s future. The Federal Reserve and other US watchdogs have said stablecoins need more regulation and should be issued by banks.

Circle is “making good progress” as it prepares to submit an official application, Allaire said in the interview in Miami, where Circle hosted events related to the Bitcoin 2022 conference. There were no delays. no hurdle in working with the OCC, he said, even as the regulator tightened oversight requirements in November for banks seeking to engage in crypto business. The United States has not granted a new bank charter to any crypto-focused company in almost a year.

“They’ve done a lot of work to lay the groundwork for how they’re going to oversee crypto, how they’re going to oversee stablecoin issuers specifically,” Allaire said.

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