Original Author: Cobo Researcher | Cobo Global
Original Link: https://mp.weixin.qq.com/s/l-Mz0dSpVDRtM46tgoizwQ
Disclaimer: This is a reposted content. Readers can obtain more information through the original link. If the author has any objections to the reposting format, please contact us, and we will modify it according to the author's requirements. Reposting is solely for information sharing and does not constitute any investment advice or represent Wu Blockchain's views and stance.
Circle (CRCL), the second-largest stablecoin issuer globally, recently submitted a federal trust bank license application to the Office of the Comptroller of the Currency (OCC). This move follows its successful IPO with a valuation of nearly $18 billion, marking a milestone strategic transformation as the first stablecoin stock in the United States.
Circle's IPO performance was phenomenal. Listed on the New York Stock Exchange on June 5th at an issue price of $31, it triggered two circuit breakers on the same day. The stock price peaked at over $298, with a nearly 10-fold increase, reaching a market value of about $70 billion—exceeding the total market cap of its USDC—and was hailed by Wall Street as "one of the most undervalued IPOs in recent years".
Against this backdrop, the strategic intent behind Circle's bank license application, as well as its impact on profitability structure and industry landscape, is worth a deep dive.
This license application not only concerns Circle's own positioning upgrade but may also redefine the competitive rules of the stablecoin track. What disruptive changes will it bring to Circle? How will it shape the future direction of the stablecoin industry?
What Real Changes Does a Top-Tier License Bring?
The OCC-issued National Trust Bank Charter is one of the high-standard permits in the U.S. federal banking regulatory system. It allows licensed institutions to:
· Provide custody services nationwide;
· Directly hold customer assets;
· Access the Federal Reserve's clearing network (such as Fedwire, FedNow);
· Be regulated by federal rather than state authorities, with more unified and authoritative compliance standards.
Currently, only Anchorage Digital Bank holds such a license. If approved, Circle will join the extremely few digital asset players with top-tier federal qualifications.
Compared to currently holding only a New York BitLicense and state money transmission licenses, this license will bring key changes: from regional permits to nationwide access, from relying on third-party banks for fund custody to directly controlling underlying fund flows.
Profitability Model Undergoes Qualitative Change: From "Interest Sharing" to "Asset Control"
The most direct change is control over USDC reserve funds. After obtaining the bank license, Circle will qualify to directly custody, invest, and manage USDC reserve assets. This means transitioning from indirectly sharing floating interest to autonomously operating the reserve asset portfolio, significantly enhancing profitability elasticity in the current high-interest-rate environment.
Simultaneously, Circle can develop value-added services like institutional custody and tokenized settlement. More importantly, this license will fundamentally alter Circle's business architecture.
In the existing system, stablecoin-to-fiat conversion still heavily depends on banking infrastructure. For example, when users exchange USDC for U.S. dollars, funds must ultimately clear through the Federal Reserve system. This capability is currently limited to financial institutions with federal bank licenses. While Circle handles issuance and on-chain circulation, it still relies on licensed financial institutions for fund custody and clearing—a structural weakness evident when previously collaborating with Paxos to launch FIUSD stablecoin: despite having on-chain technical capabilities, the final fiat clearing was still completed by Paxos.
If approved, Circle will be eligible to open an account with the Federal Reserve, directly embedding into the U.S. core financial clearing network, for the first time possessing full-process compliant capabilities from "fiat injection" to "on-chain deployment", constructing a complete issuance-custody-clearing-settlement closed loop. This upgrades it from a "technical channel" to a "clearing permission holder", fundamentally transforming its strategic positioning.
Payment giants like Visa and Stripe focus more on leveraging existing payment network advantages, integrating stablecoins into user-friendly merchant acquiring and payment interfaces to solve "last-mile" experience issues. In contrast, Circle descends to the settlement layer of the financial system, becoming a financial infrastructure provider with exclusive clearing permissions. The "ship" Circle provides will carry "last-mile" service providers like Stripe, enabling these payment front-ends to operate on a more efficient, low-cost stablecoin network.
It's worth noting that this license does not involve current account or loan permissions, so Circle will not become a traditional commercial bank. However, as a custody and clearing node, Circle can design on-chain payment and settlement products around "tokenized fund instructions" and provide compliance and technical support for traditional banks to issue programmable deposit tokens.
Background: Proactive Response to Policy Signals
Currently, stablecoin regulation is becoming a critical federal legislative issue. Draft bills like the GENIUS Act have clearly proposed implementing higher audit standards and federal regulatory requirements for large stablecoin issuers, meaning future issuers may need bank-type licenses to legally operate upon reaching a certain scale. This implies that if Circle does not proactively obtain federal banking qualifications, it may face risks of tightening business boundaries or increasing compliance pressures.
Circle CEO Jeremy Allaire has clearly stated that this move aims to strengthen USDC's "digital dollar" positioning and support the U.S.'s monetary dominance in future global payment systems.
Market Perspective: Valuation Controversy Under Regulatory Dividends
Despite Circle's strong stock performance since its IPO, market disagreements persist regarding its valuation rationality.
Circle's current profit structure primarily consists of interest income, which has advantages in a high-interest-rate environment, but its service revenue proportion is still in development, leading to different market views on its valuation sustainability.
Bullish institutions like Barclays and Bernstein believe it has long-term advantages in compliance pathways, global issuance networks, and institutional collaborations like Visa. Goldman Sachs and JPMorgan, however, remain cautious about its high valuation.
From this perspective, Circle's bank license application is not just a compliance action but a strategic institutional chip to reshape business logic. In the future, Circle can gradually transition from "interest-driven" to "service-driven" through diverse income streams like custody fees, settlement fees, and clearing services, helping alleviate market concerns about its profit sustainability and valuation support.
Summary: A Critical Node in Stablecoin Institutionalization
Circle's application for a federal trust bank license is a landmark event in the stablecoin industry's institutionalization process. It indicates that in the upcoming compliance environment, stablecoin issuers must not be limited to the technical path of "anchoring to the U.S. dollar" but must be deeply embedded in the core clearing structure of the fiat currency system.
Future market competition will revolve around custody capabilities, clearing interfaces, compliance qualifications, and service depth. A bank license will likely become a necessary threshold for a few core participants in the next cycle.
Original Link: https://mp.weixin.qq.com/s/l-Mz0dSpVDRtM46tgoizwQ
Disclaimer: This is a reposted content. Readers can obtain more information through the original link. If the author has any objections to the reposting format, please contact us, and we will modify it according to the author's requirements. Reposting is solely for information sharing and does not constitute any investment advice or represent Wu Blockchain's views and stance.
Circle (CRCL), the second-largest stablecoin issuer globally, recently submitted a federal trust bank license application to the Office of the Comptroller of the Currency (OCC). This move follows its successful IPO with a valuation of nearly $18 billion, marking a milestone strategic transformation as the first stablecoin stock in the United States.
Circle's IPO performance was phenomenal. Listed on the New York Stock Exchange on June 5th at an issue price of $31, it triggered two circuit breakers on the same day. The stock price peaked at over $298, with a nearly 10-fold increase, reaching a market value of about $70 billion—exceeding the total market cap of its USDC—and was hailed by Wall Street as "one of the most undervalued IPOs in recent years".
Against this backdrop, the strategic intent behind Circle's bank license application, as well as its impact on profitability structure and industry landscape, is worth a deep dive.
This license application not only concerns Circle's own positioning upgrade but may also redefine the competitive rules of the stablecoin track. What disruptive changes will it bring to Circle? How will it shape the future direction of the stablecoin industry?
What Real Changes Does a Top-Tier License Bring?
The OCC-issued National Trust Bank Charter is one of the high-standard permits in the U.S. federal banking regulatory system. It allows licensed institutions to:
· Provide custody services nationwide;
· Directly hold customer assets;
· Access the Federal Reserve's clearing network (such as Fedwire, FedNow);
· Be regulated by federal rather than state authorities, with more unified and authoritative compliance standards.
Currently, only Anchorage Digital Bank holds such a license. If approved, Circle will join the extremely few digital asset players with top-tier federal qualifications.
Compared to currently holding only a New York BitLicense and state money transmission licenses, this license will bring key changes: from regional permits to nationwide access, from relying on third-party banks for fund custody to directly controlling underlying fund flows.
Profitability Model Undergoes Qualitative Change: From "Interest Sharing" to "Asset Control"
The most direct change is control over USDC reserve funds. After obtaining the bank license, Circle will qualify to directly custody, invest, and manage USDC reserve assets. This means transitioning from indirectly sharing floating interest to autonomously operating the reserve asset portfolio, significantly enhancing profitability elasticity in the current high-interest-rate environment.
Simultaneously, Circle can develop value-added services like institutional custody and tokenized settlement. More importantly, this license will fundamentally alter Circle's business architecture.
In the existing system, stablecoin-to-fiat conversion still heavily depends on banking infrastructure. For example, when users exchange USDC for U.S. dollars, funds must ultimately clear through the Federal Reserve system. This capability is currently limited to financial institutions with federal bank licenses. While Circle handles issuance and on-chain circulation, it still relies on licensed financial institutions for fund custody and clearing—a structural weakness evident when previously collaborating with Paxos to launch FIUSD stablecoin: despite having on-chain technical capabilities, the final fiat clearing was still completed by Paxos.
If approved, Circle will be eligible to open an account with the Federal Reserve, directly embedding into the U.S. core financial clearing network, for the first time possessing full-process compliant capabilities from "fiat injection" to "on-chain deployment", constructing a complete issuance-custody-clearing-settlement closed loop. This upgrades it from a "technical channel" to a "clearing permission holder", fundamentally transforming its strategic positioning.
Payment giants like Visa and Stripe focus more on leveraging existing payment network advantages, integrating stablecoins into user-friendly merchant acquiring and payment interfaces to solve "last-mile" experience issues. In contrast, Circle descends to the settlement layer of the financial system, becoming a financial infrastructure provider with exclusive clearing permissions. The "ship" Circle provides will carry "last-mile" service providers like Stripe, enabling these payment front-ends to operate on a more efficient, low-cost stablecoin network.
It's worth noting that this license does not involve current account or loan permissions, so Circle will not become a traditional commercial bank. However, as a custody and clearing node, Circle can design on-chain payment and settlement products around "tokenized fund instructions" and provide compliance and technical support for traditional banks to issue programmable deposit tokens.
Background: Proactive Response to Policy Signals
Currently, stablecoin regulation is becoming a critical federal legislative issue. Draft bills like the GENIUS Act have clearly proposed implementing higher audit standards and federal regulatory requirements for large stablecoin issuers, meaning future issuers may need bank-type licenses to legally operate upon reaching a certain scale. This implies that if Circle does not proactively obtain federal banking qualifications, it may face risks of tightening business boundaries or increasing compliance pressures.
Circle CEO Jeremy Allaire has clearly stated that this move aims to strengthen USDC's "digital dollar" positioning and support the U.S.'s monetary dominance in future global payment systems.
Market Perspective: Valuation Controversy Under Regulatory Dividends
Despite Circle's strong stock performance since its IPO, market disagreements persist regarding its valuation rationality.
Circle's current profit structure primarily consists of interest income, which has advantages in a high-interest-rate environment, but its service revenue proportion is still in development, leading to different market views on its valuation sustainability.
Bullish institutions like Barclays and Bernstein believe it has long-term advantages in compliance pathways, global issuance networks, and institutional collaborations like Visa. Goldman Sachs and JPMorgan, however, remain cautious about its high valuation.
From this perspective, Circle's bank license application is not just a compliance action but a strategic institutional chip to reshape business logic. In the future, Circle can gradually transition from "interest-driven" to "service-driven" through diverse income streams like custody fees, settlement fees, and clearing services, helping alleviate market concerns about its profit sustainability and valuation support.
Summary: A Critical Node in Stablecoin Institutionalization
Circle's application for a federal trust bank license is a landmark event in the stablecoin industry's institutionalization process. It indicates that in the upcoming compliance environment, stablecoin issuers must not be limited to the technical path of "anchoring to the U.S. dollar" but must be deeply embedded in the core clearing structure of the fiat currency system.
Future market competition will revolve around custody capabilities, clearing interfaces, compliance qualifications, and service depth. A bank license will likely become a necessary threshold for a few core participants in the next cycle.
