WASHINGTON–An increasing number of stablecoin issuers are seeking bank or trust charters as they seek direct access to the Federal Reserve’s core payment system.
The race follows passage of the GENIUS Act, which creates a federal framework for “payment stablecoins” and which states that “permitted payment stablecoin issuers” may issue in the U.S.
The law requires the issuers to maintain full backing in cash or short-term Treasuries, publish monthly reserve disclosures, and are prohibited from paying interest on the coins.
Under the GENIUS Act, smaller issuers that are state-regulated and that have under $10 billion outstanding may operate if the state rules is substantially similar to the federal rules.
“In effect, the law forces stablecoin issuers into a regulated mold and makes a bank or trust charter a next step for the twin endeavors of legitimacy and scale,” noted PYMNTS in its statement.
Who’s Applying
Among the companies pursuing bank and trust charters are:
- Circle Internet Group, issuer of USDC which applied on June 30 to the Office of the Comptroller of the Currency (OCC) to establish First National Digital Currency Bank, N.A., a national trust bank that would oversee USDC reserves and institutional custody.
- Paxos Trust Co., which has filed an application to convert its New York Department of Financial Services charter into a national trust charter with the OCC.
- Bridge Infrastructure, the stablecoin arm of Stripe, which has filed for a national trust charter.
In the Offing
PYMNTS noted that the filings show that stablecoin issuers are “positioning themselves as regulated financial institutions — issuing tokens, managing reserves, and facilitating payments with direct regulatory oversight,” and that once chartered, a “stablecoin issuer bank could consolidate issuance, redemption, custody and reserve management within one institution. Under the GENIUS Act, permitted issuers may issue and redeem payment stablecoins while managing the reserves tied to those stablecoins.”
A charter would allow stablecoin issuers to hold their own reserves instead of depending on third-party banks, reducing counterparty risk and giving them tighter control over redemption, the report added.
