USDC Issuer Eyes National Trust Bank Charter to Challenge Card Networks

Circle, issuer of the USDC digital currency, has requested a national trust bank charter — one that has implications far beyond cryptocurrency.

If approved, the undertaking would allow Circle to get rid of intermediaries and expand payment processing in-house, challenging an area that card networks have traditionally dominated.

The effort comes as more businesses and merchants consider employing stablecoin rails as a mechanism to promote quicker and cheaper cross-border payments.

“If Circle gets a charter, it reinforces the idea that stablecoins aren’t just crypto products, they’re becoming integrated into the broader financial system,” observed James Wester, Head of Crypto Research at Javelin Strategy & Research, in a discussion with American Banker. “Banks that have not taken seriously tokenized money should start doing so.”

Circle’s stablecoin, USDC, is second in size only to Tether and is also widely regarded as one of the market’s most compliant products with regulators.

Its new Circle Payments Network (CPN) provides real-time settlement, cross-border payments made using stablecoins — an enormous potential advantage over traditional card systems that employ batch clearing and settlement.

The credit card sector has already seen early signs of disruption. Interchange-fee fatigued merchants have been mulling the use of stablecoins as a more economical alternative.

Mastercard’s recent partnership with crypto firm Bleap, for example, is opening up stablecoin debit card payments at 150 million merchant outlets worldwide. Mastercard and PayPal are both mulling the use of stablecoins in B2B payments, according to Payments Dive.

The use of Circle’s bank charter signals a larger ambition: to grow into a mainstream financial infrastructure provider, not a crypto firm.

The national trust charter that it is seeking is regulated by the Office of the Comptroller of the Currency (OCC) and will allow Circle to offer custodial services for a complete set of digital assets, like tokenized stocks and bonds. That would mean the stablecoin issuer won’t have to deal with a patchwork of state licenses anymore.

Trust banks cannot receive deposits or make loans, but a license is faster and easier to obtain. Thus far, only Anchorage Digital Bank has a charter of that sort.

“The banking charter will open up Circle to more options around things like funding and access to Treasury markets,” said Cornerstone Advisors senior director Tony DeSanctis. He said Circle is undertaking a rational course to align with regulators and attain institutional confidence.

That’s good sense as much as strategy. Chartering may allow Circle to reduce its compliance and infrastructure expenses by 10–20%, according to Crone Consulting. That’s vital in a stablecoin sector with margins as thin as a razor and growing competition.

“Circle is doing the same in stablecoins. By applying for a national trust bank charter, they’re moving to internalize infrastructure and eliminate third-party custodians and regulatory intermediaries,” said payments advisor Richard Crone.

That efficiency also creates room for Circle to expand into areas card networks have dominated for so long. Transactions using stablecoins, especially in a B2B setting, steer clear of foreign transaction fees and legacy payment networks, offering a new-world alternative to international commerce.

It’s not a slam dunk, though. Wester noted that such charters are rare and strongly regulated. But should Circle gain approval, it might get credit card issuers to rethink their hold on business payments before they lose more ground.