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Cryptocurrency app Circle files banking licence application with the SEC

Starting its life as a peer-to-peer network, Circle shifted to crypto and is now hoping to become a full-reserve national commercial bank.

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Jeremy Allaire/Circle

With the rise of digital currencies, we’ve seen many fintechs boom over the past few years, and now payments and crypto app Circle has announced its intention to become a fully-fledged bank.

The fintech filed its banking licence application with the SEC yesterday, revealing its intentions to become a full-reserve national commercial bank.

As a full-reserve national commercial bank, Circle will not lend out its customers’ deposits, rather all customer deposits will be backed by USDC and will be able to be withdrawn at any time.

USDC is a digital stablecoin pegged to the US Dollar and runs on several crypto blockchains, including Ethereum and Stellar and there is now more than $27.5bn of it in circulation.

Now, the fintech believes that USDC (USD Coin) will soon grow into the hundreds of millions of dollars in circulation.

“We believe that full-reserve banking, built on digital currency technology, can lead to not just a radically more efficient, but also a safer, more resilient financial system,” said Circle CEO and co-founder, Jeremy Allaire. 

Since being founded in 2013, Circle has worn many hats. The app started its life as a peer-to-peer payment network before shifting to a payment provider and is now one of the more prominent crypto trading platforms in the US. 

In 2018, Circle bought Boston-based Poloniex for a reported $400m to boost its position as one of the leading players in the cryptocurrency market.

Circle said at the time the acquisition gave it control of a marketplace where daily volumes sometimes topped $2bn, where around 70 different digital currencies and tokens are traded.

In the blog post about Circle’s filings, Allaire also took a swipe at the ongoing regulation issues in the US about what to do with cryptocurrency regulations.

Allaire wrote: “Establishing national regulatory standards for dollar digital currencies is crucial to enabling the potential of digital currencies in the real economy, including standards for reserve management and composition.”

US banking licences can take anywhere from 18 months to two years to secure so it’s unlikely that we’ll see a fully-fledged Circle bank until at least late 2022 or early 2023.

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