Shares in stablecoin issuer Circle (CRCL) stock have risen on Friday after the company earned approval to establish a trust bank. The US Office of the Comptroller of the Currency (OCC) has authorized the stablecoin issuer to directly manage its reserve assets and provide digital asset custody services for institutional clients, according to a Circle statement on Friday. Shares in CRCL stock popped over 6%.
“OCC approval to establish Circle National Trust marks a defining step in bringing blockchain technology and digital assets into the core of the U.S. financial system,” Circle CEO Jeremy Allaire said in a statement. The new entity, Circle National Trust, will operate under direct federal banking oversight. Previously, Circle needed third-party banks and custodians to hold the cash and Treasury assets backing USDC.
The charter does not greenlight Circle to operate as a commercial bank that takes deposits and makes loans. However, it does help Circle surpass a previous hurdle, making it easier for banks, asset managers, and other institutional investors to use Circle’s infrastructure for digital asset custody and blockchain-based payments. As stablecoins continue to grow in importance to traditional banks as assets, companies like Circle are competing with traditional banks that are looking to make their own stablecoins. The OCC granting Circle the ability to launch its own trust bank gives further cushion to the company and the USDC coin.
“Federal oversight of our trust bank sets a new standard for transparency, governance, and scale for Circle’s infrastructure and unlocks a new phase of adoption, where leading financial institutions can build on public blockchains with clarity and confidence,” Allaire added in his Friday press release. Despite the gain on Friday, CRCL stock remains down 15% in the last 30 days and 15% YTD.