Stablecoin issuer Circle says it has applied to the Office of the Comptroller of the Currency (OCC) to establish a national trust bank, First National Digital Currency Bank. This move follows Circle’s listing on the New York Stock Exchange last month at $31. Since then, the price almost touched $300, and is currently $181.
While Circle’s USDC token is regarded as high quality, its current legal structure is not optimal for stablecoin user risk. With BlackRock managing the majority of its reserves, it is not incorporated as a trust. That contrasts with fellow regulated issuers that are state chartered trusts such as Paxos, Gemini, and the Ripple subsidiary that issues its stablecoins.
Without a trust structure, there would be legal uncertainty in the unlikely event of a token collapse. That’s the sort of thing that will hold back institutional adoption, one of Circle’s aims. With a trust subsidiary, Circle could manage the reserves more directly.
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