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- CEO Jeremy Allaire said Circle is eager to operate under the regulation
- USDC will eventually mature and become a popular tool in financial services
- Highlighted the need for establishing national regulatory standards for digital dollar currencies
The Circle is all set to operate under the purview of the Federal Reserve, the U.S. Treasury, the OCC, and the FDIC. CEO Jeremy Allaire stated this effect. Circle plans to become a total reserve national digital currency bank.
The Goldman Sachs-backed digital payment company has unveiled plans to become a full-reserve national digital currency bank in the United States.
Circle is eager to operate under the regulation
Circle co-founder and CEO Jeremy Allaire revealed on Monday that Circle is eager to operate under the regulation and risk management requirements of the Federal Reserve, the U.S. Treasury, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation.
Allaire added that full-reserve banking, built on digital currency technology, can usher in not just a fundamentally more proficient but also a safer, more flexible financial system.
The CEO added that the company’s stablecoin, USDC, will develop to “hundreds of billions of dollars in circulation. USDC will eventually mature and become a popular tool in financial services and internet commerce applications.
Need for establishing national regulatory standards
Allaire also highlighted the need for establishing national regulatory standards for digital dollar currencies, which will enable the realization of the full potential of digital currencies in the real economy. It will also include standards for reserve management and composition.
Circle is also the creator of USDC, the world’s second-largest stablecoin by market capitalization after Tether (USDT). The USDC at present is pegged as the eighth largest cryptocurrency with a market value of $27.8 billion, while USDT holds nearly a $63 billion market cap, according to data from CoinGecko.
In partnership with cryptocurrency exchange Coinbase, Circle controls more than $27.5 billion in USDC, now the second-largest stablecoin by circulation behind Tether. All USDC tokens are backed by an equivalent amount of cash and U.S. dollar-denominated assets such as bonds and U.S. Treasuries.
The Circle and Coinbase partnership are also known as Centre Consortium. It is one of the many private innovators indirectly mentioned last week by Federal Reserve Governor Christopher Waller. Waller was a dissenting voice among the central bankers and said that there is no need for the central banks to bring forth a digital currency when private companies were already developing cheaper payment alternatives with stable coins backed by traditional assets. Christopher Waller gave these views during a virtual speech before the American Enterprise Institute.
Circle is not the first crypto-native bank to pioneer full-reserve banking on a national level for cryptocurrency companies. Earlier, Anchorage and Paxos received conditional approval of the OCC national trust bank charter this year and Kraken and Avanti, both of which are organized under Wyoming state law.
Circle agrees to stricter regulatory supervision and is now publishing information about the liquidity of its stablecoin USDC and liquidity coverage under Basel III. Base III is a set of international banking regulations which requires financial institutions to maintain proper leverage and keep certain levels of reserve capital on hand.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
