Aug 13, 2021 20:00:00

Cryptocurrency Circle announces that it aims to become a national bank, and if realized, it will effectively become a central bank in digital currency

Circle , a crypto asset (cryptocurrency) known as the issuer of USD Coin (USDC) for digital stablecoin, publishes a blog entitled 'Our Journey to Become a State-Supported Digital Currency Bank' He announced his intention to 'make Circle a virtual central bank of digital currencies by making USDC a digital currency supported by the US government.'

Our Journey to Become a National Digital Currency Bank
https://www.circle.com/blog/our-journey-to-become-a-national-digital-currency-bank

How crypto giant Circle could create a US-backed digital currency --Axios
https://www.axios.com/circle-crypto-digital-currency-bank-48656581-84ce-4c9e-9ce0-0f44be20c9a3.html

Based on the idea of 'combining legal tender and blockchain, which is an open technology, to create a new digital currency built on an open network with almost no currency friction and almost free payment immediately' Circle has partnered with Coinbase, a leading cryptocurrency exchange, to establish a consortium called Centre , which designed USDC in compliance with strict remittance supervision and regulatory standards in the United States.

Launched in 2018, USDC has grown as a key infrastructure in digital currency-enabled financial systems over the past three years, with a total issuance of $ 27.5 billion as of August 9, 2021. Over trillion yen). The total amount of transactions recorded on the blockchain exceeds $ 941 billion (about 100 trillion yen).

After talking about the steady growth of the USDC, Circle said, 'Full reserve under the supervision of the

Federal Reserve , the United States Treasury , the United States Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC). Aiming to become the National Commercial Bank of the United States. Full Reserve National Commercial Bank, built on digital currency technology, is not only fundamentally efficient, but also a safer and more resilient financial system. I believe it will be connected, 'he said, revealing that his goal is to become a national bank, not just a digital currency issuer.

If Circle, which issues digital currencies, becomes a national bank, it will need to comply with stricter rules and regulations under the supervision of government agencies. At the time of writing the article, Circle is only the issuer of digital currency, so Circle is in compliance only with remittance regulations in the United States.

Circle will increase the total issuance of USDC to several tens of trillion yen in the next few years, aiming to spread it in financial services and e-commerce applications as a low-friction and highly reliable digital currency. In addition, 'establishing domestic regulatory standards for dollar-denominated digital currencies is very important in setting standards for the management and composition of reserves in order to realize the potential of digital currencies in the real economy.' He said that establishing digital currency-related regulations will be important for Circle in the future.

'Aimed at the central bank of digital currency' of foreign media that reported for the declaration of such Circle

Axios is, 'Circle dream of the narrow bank is to become a. Fractional reserve banks avoid, the central bank of all the deposits in place It refers to a bank that deposits money. '

If Circle becomes a bank, the depositor is the holder of USDC and the collateral supporting USDC is the funds that Circle has deposited with the central bank. If Circle becomes a bank, it will be possible to open an account directly at the central bank, and by depositing bank reserves at the central bank, you will be able to receive the interest that accompanies it, which is the benefit of Circle. ..

Once this structure is realized, Circle will effectively become a bank that issues digital currencies backed by the Central Bank of the United States. In that case, this can no longer be called the 'central bank in digital currencies' for the United States.

However, Axios said, 'If Circle is allowed to become a bank, perhaps other digital currency issuers will also act as banks, and these digital currency banks will deposit bank reserves with the central bank and it. You will be competing for the benefits that come with it. ' 'Once Circle becomes a bank, buying USDC issued by the company has the same meaning as depositing directly into a central bank,' he added.

In the past, a bank called TNB aimed to establish a business in the United States based on narrow banking theory, but there are cases where the Federal Reserve Board did not like this idea, so the ideal drawn by Circle. It is quite possible that will end without being realized.

Circle's chief strategy officer, Dante Dispart, told Axios that 'the process of applying to become a bank has not yet begun,' and that it has only announced its intentions. is. In addition, he said, 'I am willing to do whatever policy makers want,' he said, and will follow the path of becoming a bank while complying with laws and regulations.