Crucial Update: Circle Executive Denies US Banking License Pursuit

Reports circulated recently suggesting major crypto firms, including stablecoin issuer Circle, were actively pursuing a US banking license. However, a key executive at Circle has stepped forward to clarify the company’s position, directly addressing these claims and outlining their actual regulatory focus.

What Reports Did Circle Deny Regarding a US Banking License?

On April 25, Dante Disparte, Circle’s chief strategy officer and head of global policy, took to social media to address the circulating news. He explicitly denied that Circle is seeking a US federal bank charter or planning to acquire an insured depository institution. This statement pushed back against reports that also named other firms like Coinbase and Paxos as potentially pursuing similar licenses.

Circle’s Focus: Navigating Future Stablecoin Regulation

Disparte clarified that Circle’s regulatory strategy is aligned with anticipated future requirements for payment stablecoins in the US. Instead of pursuing a full federal bank charter, Circle intends to comply with regulations that may require registration for a federal or state trust charter or other nonbank licenses. This distinction is important, as a full bank charter implies a broader scope of financial activities beyond stablecoin issuance.

He also emphasized the need for US lawmakers to provide regulatory clarity for stablecoins promptly, highlighting the importance of a clear legal framework for the industry’s growth and stability.

Understanding Evolving US Stablecoin Regulation

The denial comes amidst ongoing legislative efforts in the US to establish a comprehensive framework for stablecoin regulation. Two notable bills are currently moving through Congress:

• The STABLE Act: Passed by the US House Financial Services Committee, this bill generally emphasizes strict federal oversight for stablecoin issuers.
• The GENIUS Act: Introduced earlier and passed by the US Senate Banking Committee, this bill proposes a more flexible approach, allowing for both federal and state-level rules.

These differing approaches highlight the complexity of establishing a clear regulatory path for stablecoins in the United States. Circle’s strategy appears to be positioning itself to comply with whichever framework ultimately emerges, focusing on licenses specific to payment systems and stablecoin activities rather than a traditional bank charter.

Contrasting Statements: Past Discussions vs. Current Denial on Circle Banking License

It’s worth noting that reports of Circle’s interest in a US bank charter are not entirely new. In April 2022, Circle CEO Jeremy Allaire mentioned in an interview that the company was in discussions with regulators regarding an application for a bank charter. This previous statement appears to contrast with Disparte’s recent denial.

While Circle denied the specific claims in the recent report, other companies mentioned, like Coinbase, reportedly confirmed they are considering such licenses. Paxos also received preliminary approval for a federal bank charter in 2021, adding context to the industry’s interest in traditional financial licensing pathways.

Circle did not provide further comment to clarify the apparent difference between past statements and the current denial regarding the pursuit of a full Circle banking license.

Conclusion: Circle’s Stated Path Forward

In summary, despite recent reports, Circle’s Chief Strategy Officer has clearly stated that the company is not currently seeking a full US banking license or federal bank charter. Instead, Circle is focused on aligning its operations with anticipated future US stablecoin regulations, which may involve obtaining specific trust charters or nonbank licenses. The company continues to advocate for timely regulatory clarity as legislative efforts regarding stablecoins progress.