Fintech firm Circle has submitted a regulatory filing to the Securities Exchange Commission (SEC) for a license to operate as a full-reserve national commercial bank.
In the filing, Circle indicates that as a full reserve national bank, all customer deposits will be backed by its US dollar coin (USDC). In this case, the facility will not lend out its customers’ deposits and can be withdrawn at any time.
“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,” said Circle CEO and co-founder Jeremy Allaire.
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Circle, which also offers a crypto app and payment services, notes that it has held the highest regulatory standards to ensure that a dollar exchanged into USDC is safe. Circle states that its USDC reserves entail cash, cash equivalents, and other high-quality investment-grade assets issued within the United States.
Circle’s plan to go public
The filing follows the firm’s plan to go public through a special-purpose acquisition company (SPAC). The deal values Circle at $4.5 billion after the firm raised a $440 million funding round.
Worth mentioning is that USDC currently has a circulation of over $27.5 billion, and the application significantly impacts the crypto sector.
The focus will now be on SEC, considering that the regulator has held strict regulations governing the cryptocurrency sector. Notably, while announcing the filing, Allaire called for streamlining of the regulatory aspect regarding cryptocurrencies.
“Establishing national regulatory standards for dollar digital currencies is crucial to enabling the potential of digital currencies in the real economy, including standards for reserve management and composition,” said Allaire.
Circle expects banking license approval to spur significant growth in the amount of USDC in circulation. Additionally, the approval aims to push USDC to mainstream users.
In the U.S., approval of banking licenses usually takes between 18 months to two years. Therefore, the status of Circle’s application will be known by at least the end of 2022.
Featured image via DLDconference YouTube.
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