Author: Corundum｜Corundum

1. Introduction: Circle was approved for national trust bank license

On July 10, 2026, Circle announced that it had received unconditional final approval from the U.S. Office of the Comptroller of the Currency (OCC) to formally establish First National Digital Currency Bank, N.A., which will operate under the name Circle National Trust. On the day the news was announced, the share price of Circle (NYSE: CRCL), the issuer of USDC, once rose by more than 10% before the market opened, and finally closed up by about 5.7%. The implementation of this approval means that Circle’s main product USDC and its underlying asset custody infrastructure are officially included in the U.S. federal regulatory system.

Circle chose to apply to National Trust Bank instead of a traditional full-service commercial bank. National Trust Bank is a special purpose financial institution whose core business is strictly limited to the fiduciary custody of digital assets and legal currencies. It is specifically responsible for keeping assets on behalf of customers in accordance with the high security standards stipulated by law, but the law clearly prohibits it from accepting daily deposits from the public like ordinary commercial banks, or using customer funds to issue commercial loans to external parties.

This non-commercial bank positioning of "no deposits, no lending" has brought significant structural advantages to crypto/stable currency companies. By not triggering the core definition of a commercial bank in the statutory sense, National Trust Bank and its parent company are exempt from the Bank Holding Company Act, are not required to pay Federal Deposit Insurance Corporation premiums, and are not required to meet social obligations to provide credit to low- and moderate-income communities. This means that Circle avoids the extremely onerous capital restrictions and compliance operating costs of traditional commercial banks while obtaining national-level compliance credibility endorsement.

2. Regulatory changes lead to a wave of applications

The U.S. financial market will usher in an unprecedented wave of applications for federal licenses from the end of 2025 to the beginning of 2026, and Circle is one of them. According to public market information, within a short 83-day window period, the U.S. Office of the Comptroller of the Currency (OCC) received or conditionally approved applications for national trust bank licenses from 11 crypto companies and financial technology companies. This number not only exceeds the total number of similar license applications in the past many years, but also marks the reconstruction of the underlying financial infrastructure. The core policy driving force for this wave of applications comes from the "GENIUS Act" (US Stable Currency Act) signed in July 2025. The bill establishes the first comprehensive federal regulatory framework in the United States specifically for payments stablecoins.

According to the provisions of the bill, obtaining the qualification of an "approved payment stablecoin issuer" (PPSI) is a prerequisite for the legal issuance of 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 to the public. For this qualification, the bill sets two core standards:

1. Legal asset reserve requirements. Payment stablecoins must be fully backed at least 1:1 by highly liquid, low-risk assets. That is to say, for every US$1 of stablecoin issued by a stablecoin company on the network, it must deposit US$1 of cash or highly secure short-term US Treasury bonds in a real-world bank account to ensure that users can exchange digital assets back for real money at any time.

2. Prohibition on income. The bill specifically prohibits issuers from paying any form of interest or income to stablecoin holders. This means that the law does not allow stablecoins to distribute interest to users like traditional bank deposits or financial products. Its core purpose is to clarify the positioning of stablecoins only as payment and settlement tools and prevent them from being regarded as high-risk investment products.

In addition to meeting the rigid regulatory requirements of the bill, drastically reducing compliance costs is another major driving force for crypto companies to move towards "banking" on a large scale. In the past, the payments and digital asset industries in the United States have been subject to a highly fragmented state-level regulatory system. If crypto companies want to provide stablecoin issuance and asset custody services legally across the United States, they usually need to apply for and maintain a "Money Transmission License" (MTL) in each of the 50 states in the United States. Companies go to each state to apply for licenses, which not only costs millions to tens of millions of dollars every year, but also deals with regulatory reviews that vary from place to place.

The National Trust Bank license issued by the OCC gives the licensed institution "federal priority." Because federal-level laws and authorizations are higher than state-level laws, Web3 companies that obtain a national-level banking license are like getting a national pass, and can directly cover the United States with a unified set of federal highest standards. This exempts the vast majority of states from the MTL duplicate application requirement, enabling intensification of compliance costs.

3. The ultimate goal: direct connection to the underlying settlement system

If meeting compliance and reducing costs are practical considerations for crypto companies to apply for licenses, then getting rid of their dependence on traditional commercial banks and seeking independence in underlying fund settlement is their long-term strategic goal to move towards "banking".

Under the existing financial structure, the vast majority of encryption companies themselves are not qualified to directly access the country’s underlying financial network. They must rely on traditional commercial banks as intermediaries to store billions or even tens of billions of dollars in stablecoin cash reserves. This model of high reliance on third-party depository institutions exposes crypto companies to a great "single point of failure risk." To put it simply, if a crypto company stores all its cash reserves in a few traditional commercial banks, once these cooperative banks experience a liquidity run or declare bankruptcy, the crypto company's funds will be immediately frozen, paralyzing its own business.

The collapse of Silicon Valley Bank (SVB) in March 2023 fully exposed this systemic vulnerability. At that time, Circle had more than $3.3 billion in reserves stored in Silicon Valley Bank. The bank's sudden run and takeover resulted in a temporary restriction of this part of the funds, which directly triggered price fluctuations in USDC in the secondary market. By becoming a federally regulated national trust bank, Circle is able to internalize the custody and management of the underlying assets, effectively cutting off this contagion risk from external traditional banks.

More importantly, obtaining a federal-level banking license provides Web3 companies with a potential path to directly connect to the Federal Reserve's payment system. According to relevant U.S. financial regulations, institutions with a federal bank license are legally qualified to apply to the U.S. Central Bank (Federal Reserve) to open a master account (Master Account) or a new payment account. With this account, institutions can directly participate in national-level fund settlement, which is equivalent to having direct access to the country's highest-level treasury.

Once an encryption company is approved to access the Federal Reserve's underlying payment system (such as Fedwire or FedNow system), it will bring huge "settlement disintermediation" advantages. To put it simply, in the past, when users exchanged and transferred legal currency with digital assets, they needed to go through layer-by-layer review by multiple intermediary agent banks, and handling fees for each link were deducted. In the future, licensed Web3 companies can complete clearing directly in the central bank system in one step. This will not only greatly shorten the time for cross-border settlement, but also save huge middleman costs and completely change the efficiency of the exchange of digital assets and legal currency.

4. Dual-track market system

Another feature that should be noted is that in this wave of applications, various institutions mainly adopt two modes: one is "new application", that is, the company builds a high-rise building from the ground and establishes a brand new institution in full compliance with the highest federal standards; the other is "license conversion", that is, the company directly applies to upgrade the qualification of a local trust company that was originally only under the jurisdiction of a certain state government to a national trust bank under the unified jurisdiction of the federal government, so as to integrate into the mainstream financial system more quickly.

With the successive implementation of this batch of OCC national trust bank licenses, industry research institutions generally believe that the encryption industry is accelerating to form an obvious "dual-track" competition pattern. To put it simply, the future market will be clearly divided into two levels: the first level is the regular army holding national licenses, which will dominate the flow of large amounts of funds in the industry; the second level is small and medium-sized enterprises that are limited by their financial strength and compliance capabilities and can only continue to rely on state and local licenses.

Under the dual-track system, encryption companies with federal licenses will become the core hub for accepting funds from traditional institutions. Currently, large traditional institutions, including pension funds, university endowments, and sovereign wealth funds, are subject to strict compliance requirements when entering the digital asset market, and are usually only allowed to hand over their assets to "qualified custodians" with federal endorsement for safekeeping. Because these federally licensed institutions have met the highest security and auditing standards stipulated by national laws, they have naturally become the preferred channel for huge amounts of money to enter.

In contrast, long-tail encryption companies that cannot afford tens of millions of dollars in federal license application and daily maintenance costs will face great resistance when gaining the trust of mainstream institutional customers. It is expected that in the next few years, as compliance thresholds are raised across the board, local licensed institutions that cannot cross the federal regulatory threshold will experience a severe shrinkage in market share. The resources and liquidity of the crypto industry will inevitably concentrate on a few leading national trust banks such as Circle, and the industry will usher in a round of deep reshuffle and reshaping.

5. Industry evaluation and the rebound of traditional finance

For Web3 companies such as Circle, obtaining a national trust bank license is undoubtedly a watershed in the development of the industry. Circle's CEO noted in a recent report that the underlying compliance foundation has been established and the company is at a critical juncture in expanding into broader markets. As the regulatory path is opened up, the blockchain industry is trying to position itself as the core builder of the next generation of financial infrastructure in the United States.

However, the U.S. Office of the Comptroller of the Currency (OCC)’s move to issue national banking licenses to crypto companies has triggered strong opposition and concerns from the traditional U.S. 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 made clear criticisms to regulators and requested a complete suspension of the relevant license approval process.

The core objections of the traditional banking industry first focus on the issue of "regulatory arbitrage". Simply put, regulatory arbitrage means that companies take advantage of the differences between different regulations and deliberately select the rules that are most beneficial to them and have the lowest compliance costs to conduct business. Traditional commercial banks must comply with extremely high regulatory obligations when obtaining and maintaining a federal banking license. This includes being subject to strict capital limits under the Bank Holding Company Act, mandatory 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. The "National Trust Bank" applied by the encryption company is legally exempt from most of the above requirements because it does not accept retail deposits or issue commercial loans. Traditional banks believe that crypto companies enjoy the credibility endorsement of "national banks" but do not bear reciprocal financial obligations, which constitutes an extremely unfair competitive environment.

In addition, the traditional banking industry has expressed deep concerns about the transmission of systemic financial risks. BPI and other institutions pointed out in letters to regulators that if the stablecoin market explodes as a result of obtaining a federal license, it will inevitably draw away a large number of deposits from traditional commercial banks. What’s more serious is that once faced with extreme market conditions and large-scale redemptions by stablecoin holders occur, Web3 Trust Bank, as the reserve manager, will have to withdraw a large amount of fiat currency deposits deposited in cooperative commercial banks. This sudden and huge withdrawal of funds may directly cause the originally healthy traditional banks to fall into a crisis of liquidity depletion.

Finally, the traditional financial industry association accused the OCC of opaquely expanding the authority of trust banks to engage in non-trust business during the approval process. Traditional banks believe that pooling a large amount of customer funds to operate as the underlying reserves of stablecoins essentially constitutes a substantive business similar to a commercial bank's capital pool, exceeding the limited authority originally given to trust banks by law.

6. Summary and future prospects

With the promulgation of the GENIUS Act and the substantial implementation of the OCC National Trust Bank license, changes in the underlying infrastructure of digital finance in the United States have begun to occur. The most significant trend is that the stablecoin market will usher in extremely high market concentration. Due to the extremely high cost of national-level compliance, a large number of small and medium-sized Web3 companies will be unable to afford it and will be forced to exit. Ultimately, the market will be dominated by a few well-funded compliance giants.

In the competition among leading institutions, compliance advantages are being transformed into substantial business shares. Recent market transaction data shows that in the field of institutional fund precipitation and high-value transaction settlement, USDC, which has higher compliance certainty, is gradually surpassing other offshore stablecoin competitors that lack transparency review. This shows that large asset management institutions and multinational companies are more inclined to choose underlying asset networks that are directly regulated by the US federal government.

For financial institutions and practitioners in the Web3 industry, Circle's approval of the federal license is only the starting point for the reconstruction of the financial system. In the next year, the market still needs to pay close attention to the following key processes:

1. Announcement and implementation of the implementation details of the GENIUS Act. According to the interagency regulatory schedule, major regulatory agencies including the U.S. Treasury, Federal Reserve, OCC and FDIC will issue proposed rules in the third to fourth quarters of 2026, with final implementation details expected to be released in the first quarter of 2027. Although the general direction of the law has been established, the regulatory authorities still need to spend more than half a year to compile specific implementation instructions such as "how much cash must a company keep every day to be compliant" and "how much will be the fine for violations". These details will directly determine the actual operating costs and profit margins of crypto companies.

2. The Federal Reserve’s actual approval progress for the main account or payment account. Obtaining an OCC license is only an "admission ticket" to apply for a Federal Reserve account. Whether the Federal Reserve will eventually allow these encryption institutions to truly access the country's underlying settlement network still has a high policy threshold.

3. Legal litigation trends in the traditional banking industry. Currently, relevant traditional financial interest groups are in the stage of evaluating legal action. If a formal lawsuit against the OCC for overstepping its authority in issuing non-traditional licenses is filed in federal court, newly approved federal licenses may face the risk of being briefly frozen, thereby slowing down the deployment of the entire crypto financial infrastructure.

In summary, the U.S. government has clearly abandoned its plan to establish a central bank digital currency (CBDC) directly controlled by the government. Instead, the United States is bringing regulated private Web3 companies into the national financial system through the GENIUS Act and the issuance of national trust banking licenses. The ultimate goal of this strategy is to maintain the core position of the US dollar in the future global Internet financial settlement system through strict license review and reserve management while embracing the efficiency of the underlying technology of the blockchain.