Circle gets approved for a national trust bank license—how did the stablecoin issuer gradually step by step become a bank?

** I. Introduction: Circle Gets Approved for a National Trust Bank License**

On July 10, 2026, Circle announced it had received unconditional final approval from the U.S. Office of the Comptroller of the Currency (OCC), formally establishing the First National Digital Currency Bank, N.A., which will operate under the name Circle National Trust. On the day the news was released, Circle’s stock (NYSE: CRCL), the issuer of USDC, surged by more than 10% pre-market; it ultimately closed up about 5.7%. This approval being implemented means Circle’s flagship product USDC and its underlying asset custody infrastructure have been formally brought under the U.S. federal regulatory system.

Circle chose to apply for a national trust bank rather than a traditional full-service commercial bank. A national trust bank is a special-purpose financial institution whose core business is** strictly restricted to the delegated custody of digital assets and fiat currency.** It is responsible for securely holding assets on behalf of customers according to legal requirements and high safety standards, but the law explicitly** prohibits it from absorbing the public’s everyday deposits like a typical commercial bank, or using customer funds to extend commercial loans to third parties.**

This non-commercial banking positioning of “no deposit taking, no lending” brings significant architectural advantages for crypto/stablecoin companies. Because it does not trigger the statutory core definition of a commercial bank, a national trust bank and its parent company can be exempt from the requirements of the Bank Holding Company Act, do not need to pay premiums to the Federal Deposit Insurance Corporation, and do not have social obligations to provide credit to low- and moderate-income communities. This means Circle, while gaining endorsement for compliance credibility at the national level, also avoids the extremely burdensome capital constraints and compliance operating costs faced by traditional commercial banks.

II. Regulatory change leads to a wave of applications

U.S. financial markets saw an unprecedented federal-licensing application boom from the end of 2025 to the beginning of 2026, and Circle is among the participants. According to publicly available market information, within a short 83-day window, the OCC received and/or conditionally approved national trust bank license applications for a total of 11 crypto companies and fintech enterprises. Not only does this exceed the total number of similar license applications from the past several years, it also signals a rebuilding of underlying financial infrastructure. The most core policy driver behind this application wave is the GENIUS Act (U.S. Stablecoin Act) signed in July 2025. The bill establishes the first comprehensive federal regulatory framework in the U.S. specifically for payment stablecoins.

Under the bill’s provisions, obtaining “Approved Payment Stablecoin Issuer” (PPSI) status is a prerequisite for legally issuing stablecoins. Only institutions that have undergone** strict review by the federal or state government and obtained this qualification** are allowed to issue and manage stablecoins for the public. For this qualification, the bill sets two core standards:

1. Statutory asset reserve requirements. Payment stablecoins must be backed 1:1 at least by highly liquid, low-risk assets. In other words, for every $1 of stablecoin a stablecoin company issues on the network, it must hold $1 of cash in real-world bank accounts or highly secure short-term U.S. Treasuries, ensuring that users can always redeem their digital assets back into real fiat money in full at any time.

2. Revenue prohibition provisions. The bill explicitly prohibits the issuer from paying any form of interest or yield to stablecoin holders. This means the law does not allow stablecoins to distribute interest to users like traditional bank deposits or investment products. Its core purpose is to make clear that stablecoins are intended only as a payment and settlement tool, preventing them from being treated as high-risk investment products.

In addition to meeting the bill’s rigid regulatory requirements, another major driver for crypto companies to scale into “banking” is the substantial reduction in compliance costs. In the past, the U.S. payments and digital asset industry was constrained by a highly fragmented state-level regulatory system. If crypto companies wanted to legally provide stablecoin issuance and asset custody services nationwide, they typically had to apply for and maintain “money transmission licenses” (MTL) separately in each of the U.S.’s 50 states. Applying for licenses state by state not only costs tens of millions of dollars to over $10 million annually, but also involves regulatory scrutiny with inconsistent standards across jurisdictions.

By issuing national trust bank licenses, the OCC grants license holders “federal priority.” Because federal-level laws and authorizations are higher than state laws, Web3 companies that obtain national bank licenses are like having a nationally valid pass—allowing them to cover the entire U.S. using a unified federal set of the highest standards. This effectively exempts the vast majority of MTL duplicate application requirements across most states, centralizing compliance costs.

III. The final goal: direct connection to the underlying settlement system

If satisfying compliance requirements and reducing costs are the real-world considerations behind crypto companies applying for licenses, then** getting rid of reliance on traditional commercial banks and seeking independence in underlying fund settlement** is their long-term strategic goal in moving toward “banking.”

Under the existing financial structure, most crypto companies do not have the qualification to directly access the national underlying financial network. They must rely on traditional commercial banks as intermediaries to store stablecoin cash reserves worth billions or even hundreds of billions of dollars. This highly dependent model on third-party deposit institutions exposes crypto companies to extreme “single point of failure” risk. Put simply, if a crypto company stores all its cash reserves in only a small number of traditional commercial banks, then if those partner banks face liquidity squeezes or declare bankruptcy, the company’s funds could be immediately frozen—causing its business to stall.

The March 2023 collapse of Silicon Valley Bank (SVB) fully exposed this systemic vulnerability. At the time, Circle had more than $3.3 billion in reserves deposited at SVB; the bank’s sudden run and being taken over briefly restricted that portion of funds,** directly causing USDC price volatility in the secondary market**. After becoming a federally regulated national trust bank, Circle can internalize the custody and management of underlying assets, effectively cutting off contagion risk originating from external traditional banks.

More importantly, obtaining a federal-level banking license** provides a potential path for Web3 companies to directly connect to the Fed payment systems.** Under U.S. financial regulations, institutions with a federal bank license are legally eligible to apply to the U.S. central bank (the Federal Reserve) to** open a Master Account or a new type of payment account**. With such an account, the institution can directly participate in** national-level funds clearing—essentially having a direct channel into the nation’s highest-tier vault.**

Once a crypto company is approved to connect to the Federal Reserve’s underlying payment system (such as Fedwire or FedNow), it brings enormous “settlement de-intermediation” advantages. Simply put, in the past, when users exchanged and transferred fiat currency and digital assets, they had to pass through layers of approval by multiple intermediary banks and had fees deducted at each step. In the future, licensed Web3 companies can complete clearing directly in the central bank system in one step. This not only can greatly shorten cross-border settlement time, but also eliminates the cost of a large number of middlemen, fundamentally changing the efficiency of exchanging digital assets for fiat currency.

IV. A dual-track market structure

Another feature to note is that, in this application wave, institutions mainly adopted two modes: one is “new applications,” meaning companies build from scratch a brand-new institution fully formed according to the federal top standards; the other is “license conversion,” meaning companies apply to upgrade from a locally regulated trust company qualification under a single state to a national trust bank under unified federal oversight, so they can integrate into the mainstream financial system faster.

As this batch of OCC national trust bank licenses is rolled out one after another, industry research institutions generally believe that the crypto industry is accelerating toward a clearly defined “dual-track” competitive landscape. In simple terms, the market will be divided into two levels: ** the first level is the “regular forces” holding national licenses, which will dominate the flow of large volumes of capital in the industry; the second level consists of smaller companies that are constrained by funding capacity and compliance capabilities and can only continue to rely on state-level local licenses.**

Under the dual-track system, crypto companies with federal licenses will become the core hub for absorbing capital from traditional institutions. At present, large traditional institutions including pension funds, university endowment funds, and sovereign wealth funds are constrained by strict compliance requirements when entering the digital asset market, and are typically only allowed to entrust their assets to “qualified custodians” backed by federal oversight. These federally licensed institutions, having met the highest safety and audit standards required by national law, naturally become the first-choice channel for huge amounts of capital to enter.

By contrast, for long-tail crypto companies that cannot afford the tens of millions of dollars required for a federal license application and ongoing maintenance costs, gaining mainstream institutional client trust will face substantial resistance. It is expected that over the next few years, as compliance thresholds rise across the board, ** locally licensed institutions unable to cross the federal regulatory barrier will suffer a severe shrinking of market share**. Resources and liquidity in the crypto industry will inevitably concentrate among a small number of national trust bank leaders such as Circle, and the industry will undergo a deep reshuffling and reformation.

V. Industry assessment and backlash from traditional finance

For Web3 companies like Circle, obtaining a national trust bank license is undoubtedly a watershed moment for industry development. In a recent report, Circle’s CEO said the underlying compliance foundation has been established, and the company is at a critical juncture for expanding into a wider market. With the regulatory path now opened,** the blockchain industry is trying to position itself as a core builder of the next-generation U.S. financial infrastructure**.

However, the OCC’s actions in issuing national-level bank licenses to crypto companies have triggered strong opposition and concern from the U.S. traditional banking industry. Core organizations representing the interests of traditional financial institutions—including the American Bankers Association (ABA), the Bank Policy Institute (BPI), and the Independent Community Bankers Association (ICBA)—have already submitted clear criticisms to regulators and requested a comprehensive pause of the related license approval process.

The traditional banking industry’s primary objections first focus on the issue of “regulatory arbitrage.” Put simply,** regulatory arbitrage is when an entity intentionally selects the rules most favorable to it, with the lowest compliance costs, by exploiting differences between regulations.** Traditional commercial banks, when obtaining and maintaining federal bank licenses, must comply with extremely high regulatory obligations. This includes being constrained by strict capital limits under the Bank Holding Company Act, being required to pay deposit insurance premiums to the Federal Deposit Insurance Corporation (FDIC), and having to meet social obligations to provide credit to low- and moderate-income communities. Since the “national trust bank” that crypto companies apply for does not, by law, accept retail deposits or extend commercial loans, it is legally exempt from most of the above requirements. Traditional banks argue that** crypto companies enjoy the credibility endorsement of a “national bank” but do not take on equivalent financial obligations, creating a highly unfair competitive environment.**

In addition, traditional banks express deep concern about the transmission of systemic financial risk. In letters to regulators, institutions such as BPI have pointed out that if** the stablecoin market grows explosively due to receiving federal licenses, it will inevitably siphon large volumes of deposits away from traditional commercial banks.** More seriously, in extreme market conditions, if stablecoin holders undergo large-scale redemptions, the Web3 trust bank managing reserves would have to withdraw significant fiat deposits held in partner commercial banks. Such sudden and massive outflows could directly push otherwise healthy traditional banks into a liquidity crunch crisis.

Finally, industry associations in traditional finance accuse the OCC of expanding, in an opaque manner, a trust bank’s authority to engage in non-trust business during the approval process. Traditional banks believe that pooling large amounts of customer funds as underlying stablecoin reserve capital and putting them to use in practice already constitutes a** real business similar to a commercial bank’s funding pool,** exceeding the limited authority originally granted to trust banks by law.

VI. Summary and forward-looking outlook

With the enactment of the GENIUS Act and the substantive rollout of OCC national trust bank licenses, changes to the underlying infrastructure of U.S. digital finance are already underway.** The most significant trend is that the stablecoin market is set to become highly concentrated. Due to extremely high national-level compliance costs, many small and mid-sized Web3 companies will be unable to bear the burden and will be forced to exit; ultimately, the market will be dominated by a small number of well-capitalized compliance giants.**

In competition among leading institutions,** compliance advantages are being converted into real commercial market share.** Recent market trading data shows that in the areas of institutional capital allocation and settlement for high-value transactions, USDC with higher compliance certainty is gradually surpassing other offshore stablecoin competitors that lack transparent review. This indicates that large asset management institutions and multinational enterprises are more inclined to choose underlying asset networks directly regulated by the U.S. federal government.

For participants in the financial institutions and Web3 industries, Circle’s approval of a federal license is only the starting point for the rebuilding of the financial system. Over the next year, the market still needs to closely watch several key developments:

1. The publication and implementation of detailed rules under the GENIUS Act. According to an inter-agency regulatory timeline, major regulators in the U.S., including the U.S. Treasury, the Federal Reserve, the OCC, and the FDIC, will publish proposed rules in the third to fourth quarters of 2026 and are expected to publish final implementation details in the first quarter of 2027. While the overall direction of the law is already established, for example, the specific execution guidance on how much cash a business must hold each day to be compliant and how much will be fined for violations still requires regulators to spend another half year drafting. These details will directly determine the actual operating costs and profit margins of crypto companies.

2. Actual approval progress by the Federal Reserve for Master Accounts or payment accounts. Getting an OCC license is only a “pass” to apply for a Federal Reserve account. Whether the Federal Reserve will ultimately allow these crypto institutions to truly access the national underlying settlement network remains subject to high policy thresholds.

3. Legal litigation developments in the traditional banking industry. At present, relevant traditional financial interest groups are in the process of evaluating legal actions. If an official lawsuit is filed in federal court challenging the OCC’s issuance of non-traditional licenses beyond its authority, the newly approved federal licenses could face a risk of temporary freezing, potentially delaying the deployment pace of the entire crypto financial infrastructure.

In summary, the U.S. government has already made clear it will abandon plans to create a central bank digital currency (CBDC) directly controlled by the official central bank.** Instead, the U.S. is bringing regulated private Web3 companies into the national financial system through the GENIUS Act and by issuing national trust bank licenses.** The ultimate purpose of this strategy is to maintain the U.S. dollar’s core position in the future global internet finance settlement system, while embracing blockchain’s underlying technological efficiencies through strict license review and reserve management.

This article is only for legal, policy, and industry research and exchange. It aims to provide an objective analysis of digital finance, stablecoins, digital assets, and related regulatory dynamics, and does not constitute any form of investment advice, legal opinion, tax advice, or other professional advice, nor does it constitute any recommendation, promotion, or solicitation of any financial product, digital asset, or commercial project.

The regulatory rules, market data, and institutional information mentioned in the article mainly come from publicly available materials and may be adjusted due to changes in laws and regulations, regulatory policies, market conditions, and project progress. Readers should make independent judgments based on the latest publicly available information and comply with the applicable laws and regulations in their country or region. The author and the publishing platform do not assume responsibility for any investment, trading, or other business decisions made as a result of relying on the contents of this article.