Major Crypto Firms Circle, BitGo Eyeing Banking Licenses Amid Regulation

Crypto Companies Circle and BitGo Pursue Banking Licenses Amid Evolving Stablecoin Regulation

  • Major crypto companies including Circle and BitGo are exploring banking license applications to expand their financial services.
  • Recent legislative developments, including the STABLE and GENIUS Acts, are reshaping the regulatory landscape for stablecoins in the US.
  • Banking charters would allow crypto firms to operate like traditional banks but would subject them to stricter regulatory oversight.

Several major cryptocurrency companies, including stablecoin issuer Circle and crypto custodian BitGo, are reportedly seeking to obtain banking charters or licenses, according to an April 21 report by the Wall Street Journal. Other firms considering similar moves include publicly-traded exchange Coinbase and stablecoin issuer Paxos, which already received preliminary conditional approval for a US bank charter in 2021.

- Advertisement -

The push for banking licenses comes as the United States continues to develop its regulatory framework for stablecoins. Federal Reserve Chair Jerome Powell recently expressed support for establishing legal guidelines for stablecoins, calling it a “good idea” as digital assets gain mainstream adoption. Powell acknowledged that despite earlier “failures and frauds” in the crypto sector, it has produced a consumer use case with “wide appeal.”

Stablecoin Regulation Moving Forward

The US regulatory landscape for stablecoins is developing through two competing bills. The House Financial Services Committee recently passed the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, which emphasizes strict federal oversight. This bill includes a two-year moratorium on issuing stablecoins backed by self-issued digital assets and requires stablecoin reserves to be kept separate from business funds.

Meanwhile, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, which cleared the Senate Banking Committee in March, proposes a more flexible approach involving both state and federal regulation. This legislation aims to create a framework for stablecoin payments while supporting US-based issuers to reinforce the dollar’s global prominence. The GENIUS Act would classify stablecoin issuers as financial institutions subject to the Bank Secrecy Act, requiring user verification and suspicious activity reporting.

Potential Benefits and Challenges

A banking charter would enable cryptocurrency firms to function more like traditional banks, with the ability to accept deposits and issue loans. However, companies that pursue this path would face heightened regulatory scrutiny and compliance costs. Anchorage Digital, a crypto firm that already holds a federal bank charter, reportedly spent millions on regulatory compliance.

- Advertisement -

Despite these challenges, the potential benefits appear to outweigh the costs for many crypto firms. The trend aligns with reports from late March indicating that cryptocurrency and fintech companies have been increasingly interested in obtaining bank charters since the Trump administration.

None of the companies mentioned in the report had responded to inquiries from Cointelegraph at the time of publication.

✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.

Previous Articles:

- Advertisement -

Latest News

Ripple Gains Momentum: XRP Eyes $15 Amid Banking License Hopes

Ripple (XRP) is trading at $3.47 after a 0.13% increase in the past 24...

Crypto Analyst Claims Bitcoin OGs Losing Faith Amid Institutions

Early Bitcoin investors are reportedly selling their holdings amid increased institutional participation.Analyst Scott Melker...

Solo Bitcoin Miner Strikes Block, Earns $373K Amid Rising Difficulty

A solo Bitcoin miner earned $372,773 by mining block 907283 on Saturday.The block contained...

Coinbase Base App Rebrand Sparks Zora Token and SocialFi Surge

Coinbase rebranded its Wallet to the Base App on July 16, sparking a surge...

Solana Holds $177 Support as ETF Delays Weigh, Eyes $205 Rebound

Solana (SOL) saw its price fall by 3.2% this week after a strong rise...

Must Read

What Is Binance Earn?

As someone who is passionate about cryptocurrency, I am always on the lookout for new opportunities to grow my portfolio. That's why I was...