Circle (CRCL), the world's second-largest stablecoin issuer, recently submitted an application for a federal trust bank license to the U.S. Office of the Comptroller of the Currency (OCC). This move follows its successful IPO with a valuation of nearly $18 billion. As the first U.S. stablecoin stock, Circle's strategic transformation is of milestone significance.
Circle's IPO performance is phenomenal. It landed on the New York Stock Exchange at an issue price of $31 on June 5, triggering two circuit breakers on the same day. The stock price reached a high of $298, an increase of nearly 10 times, and the market valuepeaked at about $70 billion-exceeding the total market value of its USDC in circulation, and was hailed by Wall Street as "one of the most undervalued IPOs in recent years."
Against such background, the strategic intention behind Circle's application for a trust bank license, as well as its impact on the profit structure and industry landscape, are worth in-depth analysis.
This license application is not only about Circle's own positioning upgrade, but is also likely to redefine the competition rules in the stablecoin track. What disruptive changes will it bring to Circle? How will it shape the future direction of the stablecoin industry?
What real changes does a top-level license bring?
The National Trust Bank Charter issued by the OCC is one of the high-level licenses in the U.S. federal banking regulatory system. It allows licensed institutions to:
provide custody services throughout the United States;
directly hold customer assets;
access the Federal Reserve's clearing network (such as Fedwire and FedNow);
and be regulated at the federal rather than state level, so compliance standards are more unified and authoritative.
Currently, only Anchorage Digital Bank has this type of license. If Circle is successfully approved, it will be among the very few digital asset players with top federal qualifications.
Compared with the current license of only holding the New York BitLicense and the money transmission licenses of various states, this license will bring key changes: from regional licenses to national access, from relying on third-party banks for fund custody to being able to directly control the underlying fund flow.
The profit model has undergone a qualitative change: from "floating interest sharing" to "asset control"
The biggest direct change is the control over the USDC reserve. After the banking license is approved, Circle will be qualified to directly custody, invest in and manage USDC reserve assets. This means that it will shift from indirectly sharing floating interest income in the past to independently operating the reserve asset portfolio. In the current high interest rate environment, this will significantly improve its profit elasticity. At the same time, Circle will be able to carry out value-added services such as institutional-level custody and tokenized settlement. More importantly, this license will completely change Circle's business structure. In the existing system, the exchange between stablecoins and fiat currencies is still highly dependent on banking infrastructure. For example, when users exchange USDC and US dollars, the funds must ultimately be completed through the Federal Reserve clearing system. This capability is currently limited to financial institutions with federal banking licenses. Although Circle is responsible for issuance and on-chain circulation at the front end, it still needs to rely on licensed financial institutions for fund custody and clearing. This structural shortcoming was evident when Circle previously cooperated with Paxos to launch the FIUSD stablecoin: despite having on-chain technical capabilities, the final legal currency clearing link is still completed by Paxos.
If Circle is approved for a license, it will be eligible to open an account at the Federal Reserve and be directly embedded in the core financial clearing network of the United States. For the first time, it will have full-process compliance capabilities from "fiat currency injection" to "on-chain deployment", and build a complete closed loop of issuance-custody-clearing-settlement. This upgrades it from a "technical channel" to a "clearing authority holder", and a fundamental change in its strategic positioning.
In terms of encryption strategy, payment giants such as Visa and Stripe are more focused on leveraging the advantages of existing payment networks to integrate stablecoins into user-friendly merchant acquiring and payment interfaces to solve the "last mile" experience problem. On the other hand, Circle has sunk to the settlement layer of the financial system and become a financial infrastructure provider with licensed clearing authority. The "ship" provided by Circle will carry "last mile" service providers including Stripe, allowing these payment front ends to operate on a more efficient and low-cost stablecoin network.
It is worth noting that the license does not involve demand deposits or loan permissions , and Circle will not become a traditional commercial bank in the future. However, as a custody and clearing node, Circle has the ability to design on-chain payment and settlement products around "tokenized funds instructions" and can provide compliance and technical support for traditional banks to issue programmable deposit tokens.
Background: Early response to policy signals
Currently, stablecoin regulation is becoming an important issue in US federal legislation. The draft bills such as the GENIUS Act have clearly stated that higher auditing standards and federal regulatory requirements should be implemented for large stablecoin issuers. In the future, if issuers reach a certain scale, they must obtain a banking license to operate legally. This means that if Circle does not actively obtain federal banking qualifications, it may face the risk of tightening business boundaries or increasing compliance pressure.
Circle CEO Jeremy Allaire has made it clear that the move is aimed at strengthening USDC's "digital dollar" positioning and providing support for the United States' future monetary dominance in the global payment system.
What does the market think? Valuation controversy under regulatory dividends
Although Circle's stock price has performed strongly since its IPO,the market is still divided on the rationality of its valuation.
Circle's current profit structure is mainly based on interest income, which has advantages in a high-interest rate environment, but its service-based income ratio is still in the process of being established, so the market has different views on the sustainability of its valuation.
Barclays and Bernstein and other bullish parties believe that it has long-term advantages in compliance paths, global issuance networks, and partnerships with institutions such as Visa. Goldman Sachs and JPMorgan Chase are cautious about its high valuation.
From this perspective, Circle's application for a banking license is not only a compliance behavior, but also an institutional bargaining chip that attempts to reshape business logic. In the future, Circle can gradually achieve the transformation from "interest rate differential driven" to "service driven" through multiple incomes such as custody fees, settlement fees, and clearing services. This will help alleviate the market's concerns about its profitability sustainability and valuation support.
Summary: Key nodes on the path of stablecoin institutionalization
Circle's application for a federal trust bank license is a landmark event in the institutionalization process of the stablecoin industry. It shows that in the upcoming compliance environment, stablecoin issuers need to no longer be limited to the technical path of "anchoring the US dollar", but must be deeply embedded in the core clearing structure of the legal currency system.
Future market competition will focus on custody capabilities, clearing interfaces, compliance qualifications and service depth. Banking licenses are likely to become a necessary threshold for a few core participants in the next cycle.
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