Circle plans to become a national digital bank
Circle, one of the pioneers of the crypto ecosystem and the founder of the stablecoin USDC, seems to be ready for the extra scrutiny and audit as it has announced intentions to get licensed as a national digital bank.
The company had already announced its plans to go public and with over $27.5 billion USDC in circulation, this application of the company to become a bank is likely to have far-reaching consequences for the crypto ecosystem. It remains to be seen how the regulators are going to view this application in the US as the SEC and other authorities do not seem to be as favorable to crypto as the regulators in few other countries.
“It’s an acknowledgment of the global concerns regarding how digital currencies like USDC fit into the financial infrastructure,” said Dante Disparte, chief strategy officer and head of global policy for Circle.
Though the company had started as a crypto payments startup, of late, its focus seems to be more on the growth and the expansion of its stablecoin offering USDC which has grown very quickly as a strong challenger to USD Tether over the last few months. The company believes that if its banking license is approved, then it is likely to see tremendous growth in the amount of USDC in circulation as it would help to push the USDC to mainstream users. This will in turn support a lot of economic activity based out of USDC and though this is likely to be an exciting prospect for crypto supporters, the regulators may not hold a very favorable view, especially the ones in the US.
Already, we have been seeing the SEC cracking down on the growth of crypto with their battles against Poloniex and Ripple and it is quite unlikely, in our opinion, that they would allow a third party application to issue cryptocurrencies into the mainstream unless they have made up their mind about how to work with digital currencies. CBDCs are being tested by various national banks but many of the bigger countries, including the US, are not sure that they are ready for such currencies as yet as they grapple with the likely impact of such cryptocurrencies on the financial ecosystem as a whole.
A lot more preparations need to be done by the different authorities that are involved to prepare the monetary system for the advent of stablecoins and other cryptos before they can even start thinking of either introducing the CBDCs themselves or allowing third parties to circulate their stablecoins into the financial system.