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Circle wants to become a bank. If the SEC approves the application, the in-house stablecoin USD Coin could also become a serious competitor to Tether.

Circle is seeking a banking license. As the company behind the second largest US dollar stablecoin USD Coin (USDC) announced yesterday, Monday, August 9, Circle plans to become a full money bank. This means that all deposits must be backed 100 percent by cash or cash-like reserves. Typically, banks hold only fractional reserve shares of deposits. Meanwhile, as a full reserve bank, Circle would be fully on crypto line.

We believe that full reserve banking based on digital currency technology can lead not only to a radically more efficient financial system, but also a safer and more resilient one.

CEO Jeremy Allaire summarizes the hoped-for gain in stability.

If the relevant financial regulator, the SEC, approves the application , Circle would be one of the few companies in the crypto sector to hold a full banking license in the US. The company would then be under the supervision of various authorities such as the Federal Reserve, the U.S. Treasury and Office of the Comptroller of the Currency (OCC).

The advantage of a banking license would be that Circle could hold client funds itself. That would give the company more independence, according to the SEC filing. In addition, banks would be able to hold accounts at the central bank and thus refinance themselves cheaply.

USDC on trend

Meanwhile, the in-house, physically backed stablecoin continues to soar. As of press time, USDC’s market capitalization is around $28 billion. This compares to around USD1.2 billion a year ago. Meanwhile, USDC is the eighth largest cryptocurrency. However, the second largest stablecoin is still significantly smaller than industry leader Tether (USDT). After all, the latter has a market capitalization of around USD 72 billion.

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Most recently, Yellow Rocket Agency also reported on Circle’s planned IPO on the New York Stock Exchange in the fourth quarter of this year together with Concord Acquisition Corp.