Circle announces plan to become a national commercial bank

The digital payments firm Circle announced last August 9 on their website that they ‘intend to become a full-reserve national commercial bank’ built on digital currency technology regulated by authorities. According to CEO Jeremy Allaire in the blog post, this opportunity will allow them to provide on-demand liquidation services for both fiat and digital currencies, especially Circle’s stablecoin USD Coin (USDC).

Circle’s plan to become a ‘full-reserve bank’ entails keeping a depositor’s funds in cash equivalent which will be ready for withdrawal at any time, allowing on-demand liquidity to all their customers.

The announcement states that they aim to exceed the Liquidity Coverage Ratio (LCR) and High-Quality Liquid Assets (HQLAs) under the international regulatory framework, Basel III as they move into the commercial banking sector. To promote transparency, they will start publishing ‘information about the fundamental liquidy of USDC and their liquidity coverage under Basel III’.

According to the post, Circle will be supervised to ensure they fulfil all the requirements set by US regulators namely the Federal Reserve, the United States Treasury, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).

‘We believe that full-reserve banking built on digital currency technology can lead to not just radically more efficient but also a safer, more resilient financial system,’ Allaire said in the blog post and also pointed out how they were looking forward to the growth of USDC.

In an interview with American-based network Bloomberg Television on August 10, Allaire highlighted the importance of authorities overseeing the inevitable growth of digital currencies in the future, believing that ‘over time there will be hundreds of billions of dollars of these types of digital currencies in circulation’.

Circle is the prime developer of USDC which is known as the second-largest stablecoin with a market capitalization of $27,936,960,390 as of writing. It is backed by global investment banking firm Goldman Sachs which will aid in Circle’s transition to becoming a full-reserve bank.

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