- Circle Internet Group, the issuer of the USDC stablecoin, has filed an application to create a national trust bank in the US, which would enable it to custody its own reserves and offer custody services to institutional clients.
- Several firms have commenced analysis coverage of Circle following its IPO last month, with Bernstein giving the firm’s stock an ‘outperform’ rating and calling it an “investor must-hold”.
USDC issuer, Circle, is eyeing a move into banking in its latest effort to integrate its web3 technology into the existing financial system.
Circle Internet Group, the company behind the USDC stablecoin, filed an application with the US Office of the Comptroller of the Currency (OCC) to create a national trust bank in the US, as reported by Reuters on June 30.
But you won’t be able to hold your savings in ‘Circle Bank’. If Circle’s application for a banking charter is approved it would allow the company to custody its own reserves and also provide digital asset custody services for institutional customers — it won’t be able to offer deposit or loan services.
Related: Bitwise CIO: Circle’s Blockbuster IPO Underscores Need for Dual Crypto Strategy
Circle’s move to gain a banking license follows its stellar initial public offering (IPO) last month, which saw the company’s share price soar 167% on the first day of trading.
Circle has long sought to seek the highest standards of trust, transparency, governance, compliance. Becoming a publicly traded company is a significant part of that, becoming a national trust company is again a continuation of that.
Jeremy Allaire, Circle CEOCircle’s bank would be known as First National Digital Currency Bank. The company has reportedly sought a US banking charter for some time, however it had previously denied reports that it was looking to gain a trust banking charter.
At the time of writing, Circle stock was changing hands at US$181.59 (AUD$275). Its value has increased almost 485% since launch, according to Yahoo Finance. The stock’s recent price peak was on June 23, when it hit a whopping US$292 (AUD$444).
Circle’s Push to Strengthen TradFi Connections
Circle’s USDC has long been considered the US dollar-pegged stablecoin most committed to transparency and is arguably the most in sync with regulators. Its strengthening position as a stablecoin of choice for TradFi has seen broader finance market players take notice.
On June 30, analysts at the research and brokerage firm Bernstein began coverage of Circle, giving it an initial rating of ‘outperform’, a price target of US$230 (AU$350), and suggesting it has a regulatory advantage over other stablecoins and may underpin the future of finance.
“Circle is building a market-leading digital dollar stablecoin network, with a strong regulatory edge, liquidity headstart and marquee distribution partnerships,” The Block reported the firm’s analysts writing in a note sent to its clients on Monday.
We view CRCL as an investor must-hold, to participate in the new internet-scale financial system built for the next decade.
Analyst note, Bernstein
Related: Arthur Hayes Unveils the State of Stablecoins in ‘Assume the Position’
JPMorgan disagrees with this assessment. The firm said Circle is already well overvalued — slapping it with an ‘underweight’ rating and a price target of just US$80 (AU$121): “We think highly of the Circle management team and are confident in the outlook for outsized stablecoin and USDC growth. However, we see Circle’s current market capitalization elevated.”
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