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Stablecoin issuer says it is closer to opening a U.S. crypto bank charter

The issuer of the second-largest stablecoin seems to be one step closer to establishing a cryptocurrency bank charter in the United States, as it continues trying to negotiate the launch with the regulators.

Specifically, Circle Internet Financial’s Chief Executive Officer Jeremy Allaire said in an interview at the Bitcoin 2022 conference in Miami that the company was continuing with the negotiations which have begun in August 2021 when the firm first announced its intentions, Bloomberg reported on April 13.

However, the startup, which is the issuer of USD Coin (USDC), is yet to submit an application for its crypto charter, and Allaire has refused to give a date estimate, only commenting that it would happen “hopefully in the near future.”

It is also worth noting that Circle had submitted in August a regulatory filing to the Securities and Exchange Commission (SEC) for a license to operate as a full-reserve national commercial bank, in which all customer deposits would be backed by USDC.

Optimism around negotiations

The negotiations about the company’s plans are currently taking place between the Circle management and the U.S. Office of the Comptroller of the Currency (OCC), which governs bank charters in the country.

According to Allaire, the subjects have ranged from interoperability between blockchains to assessing the operational risks of a specific blockchain, in the context of vulnerability of crypto bridges to publicized hacks, such as the recent $600 million attack on Axie Infinity (AXS).

He also said in the interview that his company was “making good progress” on submitting a formal application, facing no delays or obstacles from the OCC, even though the agency has increased supervision requirements in November 2021 for banks engaging in crypto activities.

As he explained:

“They’ve been doing a lot of work laying the groundwork for how they’re going to supervise crypto, how they’re going to supervise stablecoin issuers specifically.”

U.S. regulators advise caution

Elsewhere, Finbold reported in early April on the warning of the Federal Deposit Insurance Corporation (FDIC) about significant safety risks and “financial stability concerns’ surrounding cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH). 

Along with the warning, the U.S. banking regulator also urged financial institutions to report any crypto-related activities, be it ongoing or planned, allowing the agency “to assess the safety and soundness, consumer protection, and financial stability implications of such activities.”

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