Circle plans to apply for a US banking license. Will the stablecoin issuer become a crypto bank?

According to the Wall Street Journal, multiple cryptocurrency companies, including stablecoin issuer Circle and BitGo, are planning to apply for U.S. bank charters and licenses. Are stablecoin issuers likely to become crypto banks? Does this go against Satoshi Nakamoto's original vision? According to the Wall Street Journal's sources, multiple cryptocurrency companies, including Circle and BitGo, are planning to apply for bank charters/licenses. Reports also suggest that cryptocurrency exchange Coinbase and stablecoin issuer Paxos are considering similar steps. Currently, the Trump administration is working to integrate cryptocurrencies into mainstream finance, with Congress proposing two bills aimed at establishing a regulatory framework for stablecoins, making it easier to trade more volatile cryptocurrencies. These bills would require stablecoin issuers to obtain regulatory charters or licenses. Some cryptocurrency companies are interested in national trust or bank licenses, which would allow them to operate like traditional banks, such as accepting deposits and issuing loans. Others are seeking narrower licenses to allow stablecoin issuance. Any crypto company obtaining a bank license would be subject to stricter regulation, including Know Your Customer (KYC) and anti-money laundering programs, capital requirements, and information security standards. Another challenge for crypto companies is accessing the Federal Reserve's Master account, which has long been difficult for them to enter. Custodia Bank, despite years of effort, was still denied access to the Fed's Master account. This special account allows direct transactions with the Federal Reserve without intermediary banks. The Fed released guidelines in August 2022 that were interpreted as potentially expanding Master account access, giving hope to crypto firms like Circle and Kraken, but no crypto company has been approved yet. Bloomberg columnist Matt Levine suggests that stablecoin issuers are similar to a form of crypto bank: you deposit dollars with a stablecoin issuer, who returns tokens representing your right to reclaim those dollars, while being able to use those dollars as they wish. The article raises questions about whether crypto companies seeking bank licenses must engage in traditional banking activities and whether this approach contradicts the original vision of cryptocurrencies, which were partly created as a response to traditional banking systems. The piece concludes by pondering whether cryptocurrencies can truly rebuild banking operations and whether this approach aligns with Satoshi Nakamoto's original principles.