Amid a period of increasing regulatory interest in stablecoins, Circle, the digital payment company that issues USDC, the world’s second-largest stablecoin , has announced plans to become a full-reserve national digital currency bank in the U.S.
- In a company blog post, CEO and co-founder Jeremy Allaire said the company was prepared to operate under the supervision and requirements of the U.S. Federal Reserve, the U.S. Treasury and other government agencies. “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,” he said.
- With a market cap of close to US$30 billion, Goldman Sachs-backed Circle said it was undertaking the plan in conjunction with regulators seeking to develop large-scale private-sector U.S. dollar digital currencies and learn to manage their risks and opportunities. “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,” Allaire said.
- The announcement comes only days after U.S. Federal Reserve Governor Christopher Waller appeared to throw his support behind the development of private sector digital currencies, as opposed to a U.S. developed central bank digital currency. In an address to the American Enterprise Institute, Waller said: “The private sector is already developing cheaper payment alternatives to compete with the banking system … Hence it seems unnecessary for the Federal Reserve to create a CBDC to drive down payment demands we see by banks.”
- Heads of both the U.S. Treasury and Securities and Exchange Commission have made public calls for greater regulation of stablecoins in recent months. SEC Chair Gary Gensler recently said stablecoins should be subject to the same securities laws as the assets that underwrite them, and Treasury Secretary Janet Yellen called stablecoins a potential risk to financial systems.
- Circle announced it would go public in early July through a merger with special acquisition company Concord Acquisition Corp in a deal valuing Circle at US$4.5 billion. The transaction is expected to be complete in the fourth quarter.