Circle, the digital payment company that issues USDC, the world’s second-largest stablecoin, has announced plans to become a full-reserve national digital currency bank in the United States.
CEO and co-founder Jeremy Allaire stated in a company blog post that the company was prepared to operate under the supervision and requirements of the U.S. Federal Reserve, the U.S. Treasury, and other government agencies. he said that We believe that full-reserve banking, based on digital currency technology, can result in not only a radically more efficient financial system but also one that is safer and more resilient.
Circle, which is backed by Goldman Sachs and has a market capitalization of close to US$30 billion, said it was pursuing the plan in collaboration with regulators to develop large-scale private-sector US dollar digital currencies and gain experience managing their risks and opportunities. “Establishing national regulatory standards for dollar digital currencies is critical for realizing their full potential in the real economy, including standards for reserve management and composition,” Allaire stated.
The announcement comes just days after the United States Federal Reserve Governor Christopher Waller appeared to endorse the development of private-sector digital currencies over a central bank-developed digital currency in the United States. Waller stated in an address to the American Enterprise Institute, “The private sector is already developing cheaper payment alternatives to compete with the banking system… Hence, it appears unnecessary for the Federal Reserve to establish a CBDC to reduce payment demands on banks.”
In recent months, both the Treasury and the Securities and Exchange Commission have made public calls for increased regulation of stablecoins. SEC Chairman Gary Gensler recently stated that stablecoins should be subject to the same securities laws as the underlying assets, and Treasury Secretary Janet Yellen described stablecoins as a potential threat to financial systems.
Circle announced in early July that it would go public via a merger with special acquisition company Concord Acquisition Corp, valuing the company at US$4.5 billion. The transaction is anticipated to close in the fourth quarter of this year.
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