Circle, the global cryptocurrency finance company recently acquired by Goldman Sachs for $140 million, has announced plans to seek a federal banking license. In what would be a huge victory for both Circle and Goldman Sachs, this would be the first example of a digital currency company obtaining such a status with regulators in the United States.
— Bloomberg Crypto (@crypto) June 6, 2018
By accessing the Fed’s regulatory framework and support, Circle would not have to rely on traditional lenders, and would be able to hold customers assets in legal tender such as the U.S Dollar, as well as digital coins. By offering custodian accounts, individuals and businesses would be able to take advantage of the growing and lucrative cryptocurrency markets.
Officials at the company say they have had preliminary conversations with both staff as the SEC, officials from the Financial Industry Regulatory Authority and the Office of the Comptroller of the Currency.
Chief Executive Officer Jeremy Allaire made this statement:
To hold reserves with the Federal Reserve, to natively access the central-banking system without intermediaries, to directly settle with other banks in other markets around the world through those networks — that can improve the efficiency of what we deliver, it can reduce the costs,”
In what seems to be shaping up as a regulatory race, Coinbase have also been linked to approaching banking license conversations, with two officials meeting with the OCC’s chief innovation officer in January. It will certainly be interesting to see which company can acquire official banking status first, as well as the potential renewed interest in industry and private investment that such a development would bring.
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