Circle receives national trust bank charter: How stablecoin issuers are gradually becoming banks

1. Introduction: Circle Receives National Trust Bank Charter

On July 10, 2026, Circle announced it had received unconditional final approval from the Office of the Comptroller of the Currency (OCC) to formally establish a National Trust Bank (First National Digital Currency Bank, N.A.), which will operate under the name Circle National Trust. On the day of the announcement, shares of Circle (NYSE: CRCL), the issuer of USDC, surged over 10% in pre-market trading before closing up approximately 5.7%. The finalization of this approval signifies that Circle's flagship product, USDC, and its underlying asset custody infrastructure are now formally integrated into the U.S. federal regulatory system.

Circle chose to apply for a National Trust Bank charter, rather than a traditional full-service commercial bank. A National Trust Bank is a special-purpose financial institution whose core business is strictly limited to the fiduciary custody of digital assets and fiat currency. It is specifically tasked with safeguarding client assets according to high-security standards mandated by law, but is legally prohibited from accepting everyday public deposits or using customer funds to issue commercial loans, like a regular commercial bank would.

This non-commercial bank positioning—"no deposits, no loans"—offers significant structural advantages for crypto/stablecoin companies. By not triggering the legal definition of a commercial bank, a National Trust Bank and its parent company are exempt from the Bank Holding Company Act, do not need to pay premiums to the Federal Deposit Insurance Corporation (FDIC), and are not required to fulfill social obligations like providing credit to low-to-moderate income communities. This means Circle gains the endorsement of national-level compliance credibility while avoiding the extremely heavy capital restrictions and operational compliance costs of traditional commercial banks.

2. Regulatory Changes Spark a Wave of Applications

The U.S. financial market experienced an unprecedented surge in federal charter applications from late 2025 to early 2026, with Circle being one of them. According to public market information, within a brief 83-day window, the OCC received or conditionally approved applications for National Trust Bank charters from a total of 11 crypto companies and fintech firms. This number not only exceeds the total sum of similar charter applications over the past several years but also signifies a restructuring of the underlying financial infrastructure. The core policy driver behind this application wave is the GENIUS Act (the U.S. stablecoin bill) signed in July 2025. This act established the first comprehensive federal regulatory framework specifically for payment stablecoins.

According to the Act's provisions, obtaining the status of a "Permitted Payment Stablecoin Issuer" (PPSI) is a prerequisite for legally issuing stablecoins. Only institutions that have undergone rigorous federal or state scrutiny and obtained this qualification are permitted to issue and manage stablecoins to the public. The Act sets two core standards for this qualification:

1. Legal Asset Reserve Requirement. Payment stablecoins must be backed at least 1:1 by highly liquid, low-risk assets. This means that for every $1 of stablecoin issued on the network, the stablecoin company must hold $1 in cash or highly safe short-term U.S. Treasury bonds in a real-world bank account, ensuring users can always redeem their digital assets for fiat currency without loss.

2. Prohibition on Earnings. The Act explicitly prohibits issuers from paying any form of interest or yield to stablecoin holders. This means the law does not allow stablecoins to distribute interest to users like traditional bank deposits or wealth management products. The core purpose is to clearly define stablecoins solely as payment and settlement instruments, preventing them from being treated as high-risk investment products.

Beyond meeting the rigid regulatory requirements of the Act, significantly reducing compliance costs is another major driving force behind the large-scale "bankification" of crypto companies. In the past, the U.S. payments and digital asset industry suffered from a highly fragmented state-level regulatory system. To legally offer stablecoin issuance and asset custody services nationwide, crypto companies typically had to apply for and maintain a "Money Transmitter License" (MTL) in all 50 states. Applying for licenses state-by-state not only cost millions to tens of millions of dollars annually but also required dealing with varying regulatory standards across different jurisdictions.

The National Trust Bank charter issued by the OCC grants the licensee "federal preemption." Because federal laws and authorization take precedence over state laws, a Web3 company holding a national bank charter gains a nationwide pass, allowing it to use a single, uniform federal standard to cover the entire country. This exempts the holder from duplicate MTL application requirements in most states, achieving consolidation of compliance costs.

3. The Ultimate Goal: Direct Access to the Underlying Settlement System

If satisfying compliance and reducing costs are the immediate considerations for crypto companies applying for charters, then breaking free from reliance on traditional commercial banks and seeking independence in underlying fund settlement represents their long-term strategic goal of "bankification."

Under the current financial structure, most crypto companies themselves lack the qualification to directly access the nation's underlying financial network. They must rely on traditional commercial banks as intermediaries to hold billions or even tens of billions of dollars in stablecoin cash reserves. This model of high dependence on third-party depository institutions exposes crypto companies to significant "single point of failure risk." Simply put, if a crypto company deposits all its cash reserves with a few traditional commercial banks, and one of those partner banks experiences a liquidity run or declares bankruptcy, the crypto company's funds would be immediately frozen, potentially crippling its own operations.

The collapse of Silicon Valley Bank (SVB) in March 2023 fully exposed this systemic vulnerability. At that time, Circle had over $3.3 billion in reserves held at SVB. The bank's sudden run and seizure caused these funds to be temporarily restricted, directly triggering price volatility for USDC in the secondary market. By becoming a federally regulated National Trust Bank, Circle can internalize the custody and management of its underlying assets, effectively cutting off this contagion risk from external traditional banks.

More importantly, obtaining a federal-level bank charter provides Web3 companies with a potential pathway to directly connect to the Federal Reserve's payment system. According to relevant U.S. financial regulations, institutions holding a federal bank charter are legally eligible to apply to the central bank (the Federal Reserve) for a Master Account or new types of payment accounts. With such an account, an institution can directly participate in national-level fund clearing, essentially gaining a direct channel into the highest echelon of the nation's treasury.

If a crypto company gains approval to access the Fed's underlying payment systems (such as Fedwire or FedNow), it would bring immense benefits of "settlement disintermediation." Simply put, currently, when users convert and transfer between fiat currency and digital assets, transactions must pass through multiple layers of review by various intermediary correspondent banks, with fees deducted at each step. In the future, a licensed Web3 company could potentially complete settlement directly and instantly within the central bank's system. This would not only drastically reduce the time for cross-border settlements but also eliminate substantial intermediary costs, fundamentally changing the efficiency of exchange between digital assets and fiat currency.

4. Market Dual-Track System

Another notable characteristic of this application wave is that institutions mainly adopted two models: one is "de novo application," where a company builds from the ground up, establishing a brand-new institution entirely according to the highest federal standards; the other is "charter conversion," where a company upgrades its existing state-chartered trust company qualification, previously under the jurisdiction of a single state, to a nationally supervised trust bank, integrating more quickly into the mainstream financial system.

As this batch of OCC National Trust Bank charters is gradually finalized, industry research institutions widely believe that the crypto industry is accelerating the formation of a clear "dual-track" competitive landscape. Simply put, the future market will be clearly divided into two tiers: the first tier consists of the "regular army" holding national charters, dominating large-value fund flows within the industry; the second tier comprises small and medium-sized enterprises limited by capital strength and compliance capabilities, forced to continue relying on various state-level licenses.

Under this dual-track system, crypto companies with federal charters will become the core hubs for channeling funds from traditional institutions. Currently, large traditional institutions like pension funds, university endowments, and sovereign wealth funds, when entering the digital asset market, are subject to strict compliance requirements. They are typically only permitted to entrust their assets to "qualified custodians" with federal backing. Because these federally licensed institutions meet the highest security and auditing standards mandated by national law, they naturally become the preferred entry point for massive capital inflows.

In contrast, for long-tail crypto companies unable to afford the multi-million dollar costs of applying for and maintaining a federal charter, gaining the trust of mainstream institutional clients will face significant hurdles. It is expected that in the coming years, as compliance barriers are universally raised, locally licensed institutions unable to cross the federal regulatory threshold will experience a severe contraction in market share. Resources and liquidity within the crypto industry will inevitably concentrate among a few leading National Trust Banks like Circle, leading to a deep round of industry reshuffling and restructuring.

5. Industry Reactions and Backlash from Traditional Finance

For Web3 companies like Circle, obtaining a National Trust Bank charter is undoubtedly a watershed moment for the industry. Circle's CEO noted in a recent report that the foundational compliance framework is now in place, positioning the company at a critical juncture for expansion into broader markets. With the regulatory pathway cleared, the blockchain industry is attempting to position itself as a core builder of America's next-generation financial infrastructure.

However, the OCC's issuance of national bank charters to crypto companies has sparked strong opposition and concern from the traditional U.S. banking industry. Key organizations representing the interests of traditional financial institutions, including the American Bankers Association (ABA), the Bank Policy Institute (BPI), and the Independent Community Bankers of America (ICBA), have voiced clear criticism to regulators and have called for a complete halt to the charter approval process.

The core objection from traditional banking centers first on the issue of "regulatory arbitrage." Simply put, regulatory arbitrage involves companies exploiting differences between various regulations to deliberately choose the rules that are most favorable and have the lowest compliance costs for their business. When obtaining and maintaining a federal bank charter, traditional commercial banks must adhere to extremely high regulatory burdens. This includes strict capital requirements under the Bank Holding Company Act, mandatory deposit insurance premiums paid to the FDIC, and the social obligation to provide credit to low-to-moderate income communities. Because crypto companies applying for "National Trust Bank" charters do not legally accept retail deposits or issue commercial loans, they are legally exempt from most of these requirements. Traditional banks argue that crypto companies enjoy the credibility endorsement of a "national bank" without bearing the corresponding financial obligations, creating a highly unfair competitive environment.

Furthermore, the traditional banking industry has expressed deep concerns about the transmission of systemic financial risk. In letters to regulatory authorities, organizations like the BPI pointed out that if the stablecoin market experiences explosive growth due to the receipt of federal charters, it will inevitably drain significant deposits from traditional commercial banks. More seriously, in the event of extreme market conditions leading to large-scale redemptions by stablecoin holders, the Web3 trust banks acting as reserve managers would have to withdraw large amounts of fiat deposits held at partner commercial banks. This sudden, massive withdrawal of funds could directly cause liquidity crises at otherwise healthy traditional banks.

Finally, traditional financial trade associations accused the OCC of opaquely expanding the permissible activities of trust banks beyond traditional trust business during the approval process. Traditional banks argue that aggregating large pools of customer funds to serve as underlying reserves for stablecoins essentially constitutes a business activity akin to a commercial bank's deposit pool, exceeding the limited authority originally granted to trust banks by law.

6. Summary and Future Outlook

With the enactment of the GENIUS Act and the substantive issuance of OCC National Trust Bank charters, the transformation of the underlying infrastructure of U.S. digital finance has begun. The most notable trend is that the stablecoin market will experience extremely high concentration. Due to the prohibitive costs of national-level compliance, many small and medium-sized Web3 companies will find it unsustainable and be forced to exit, ultimately leaving the market dominated by a few well-capitalized, compliant giants.

In the competition among leading institutions, compliance advantages are translating into tangible market share. Recent market trading data indicates that in the areas of institutional capital accumulation and high-value transaction settlement, USDC, which possesses higher compliance certainty, is gradually surpassing its offshore stablecoin competitors that lack transparency and rigorous audits. This suggests that large asset managers and multinational corporations are increasingly favoring underlying asset networks directly regulated by the U.S. federal government.

For financial professionals and participants in the Web3 industry, Circle receiving a federal charter is just the starting point for the restructuring of the financial system. Over the next year, the market must closely monitor several key processes:

1. Publication and Implementation of the Detailed Rules for the GENIUS Act. According to the interagency regulatory timeline, major regulatory bodies like the U.S. Treasury, the Federal Reserve, the OCC, and the FDIC are scheduled to issue proposed rules in the third to fourth quarters of 2026, with final implementation details expected in the first quarter of 2027. While the broad legal direction is set, specific operational instructions—such as "exactly how much cash must a company hold daily to be compliant" or "what are the penalties for violations"—will take regulators the better part of a year to draft. These details will directly determine the actual operating costs and profit margins for crypto companies.

2. The Federal Reserve's Actual Progress on Approving Master or Payment Accounts. Obtaining an OCC charter is merely receiving the "admission ticket" to apply for a Federal Reserve account. Whether the Fed will ultimately allow these crypto institutions to truly access the national underlying settlement network remains subject to a high policy threshold.

3. Legal Action Trends from the Traditional Banking Industry. Currently, relevant traditional financial interest groups are in the stage of evaluating legal actions. If a formal lawsuit is filed in federal court challenging the OCC's authority to grant non-traditional charters, newly approved federal charters could face the risk of being temporarily frozen, thereby slowing down the deployment pace of the entire crypto financial infrastructure.

In summary, the U.S. government has clearly abandoned the plan to establish a government-issued Central Bank Digital Currency (CBDC). Instead, it is integrating regulated private Web3 companies into the national financial system through the GENIUS Act and the issuance of national trust bank charters. The ultimate goal of this strategy is to embrace the efficiency of blockchain technology while maintaining the dollar's central role in the future global internet financial settlement system through strict charter scrutiny and reserve management.

This article is solely for the purpose of legal, policy, and industry research exchange, aiming to provide an objective analysis of digital finance, stablecoins, digital assets, and related regulatory dynamics. It does not constitute any form of investment advice, legal opinion, tax advice, or other professional counsel, nor does it constitute a recommendation, endorsement, or solicitation for any financial product, digital asset, or commercial project.

The regulatory rules, market data, and institutional information mentioned in this article are primarily sourced from public materials and may be subject to changes due to adjustments in laws, regulations, regulatory policies, market conditions, and project developments. Readers are advised to form their own independent judgment based on the latest publicly available information and to comply with applicable laws and regulations in their country or region. The author and publishing platform assume no responsibility for any investment, trading, or other business decisions made in reliance on the content of this article.