US Creates New Breed of Banks for Cryptocurrencies
The US government is creating a new class of banks that cater specifically to cryptocurrencies and digital assets.
Circle has received a federal bank charter, but it doesn't come with traditional banking powers such as checking accounts or mortgages. Instead, Circle National Trust will focus on custody, fiduciary administration, stablecoin reserves, and settlement.
This move is part of a broader trend where Washington is giving crypto companies the regulatory shell of banking while separating it from the business model Americans usually associate with banks.
The OCC has approved nine companies since December, including Ripple, BitGo, Fidelity Digital Assets, Paxos, and Coinbase. Morgan Stanley's national trust bank has $7.2 trillion in assets under administration as of March 31, including $1.7 trillion in custody and safekeeping accounts.
The OCC's trust-bank guidance states that most national trust banks don't offer loans, accept deposits, or carry FDIC insurance. This model fits digital assets well, as institutions need a regulated entity to safeguard private keys, segregate customer property, administer tokenized assets, and connect transfers with conventional settlement.