Circle Internet Financial Ltd. is presently one of the most profitable and efficient cryptocurrency platforms. However, they are looking to make themselves more of a presence in another world – fiat banking. This new plan is funded partially through Goldman Sachs Group Inc, though they want to eventually get a federal banking license to expand their range of services. Additionally, registration will be part of the trading venue through the SEC to help consumers use securitized tokens.
The leaders at Circle, which included CEO Jeremy Allaire, spoke to Bloomberg.com in an interview to show the plans that they have for this new arena. So far, there is been no cryptocurrency platform that has transitioned into a U.S. regulated banking institution. Even though this change would provide an improved reputation for the platform, applying for such a transition will land it in the middle of major scrutiny by the SEC for validation. It would also require that Circle abide by the federal regulations put forth by banks, which would override their responsibility as a crypto platform.
According to officials with Circle, there have already been conversations with the Office of the Comptroller of the Currency to get those banking options in place. They have also spoken with the SEC and related officials regarding the decision to work with brokerages. Most likely, Circle will focus on associating with SEC regulatory measures, rather than the banking license. However, the OCC, Finra, and SEC have not provided comments.
Accessing The Federal System
By working on bank charter, Circle would not have to rely as heavily on traditional lenders. This move could make it possible to use customer assets with digital coins and government-regulated currencies. Allaire noted,
“To hold reserves with the Federal Reserve, to natively access the central-baking 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.”
During the beginning of this round of funding, Goldman Sachs assisted in 2015. There was another funding round in May that has been valued at about $3 billion. Right now, Circle is at the front of the line as they build relationships with regulators, which could influence their decisions.
Another company that has toyed with this transition is Coinbase, which one of the largest trading platforms in the nation right now. Officials met with the chief innovation officer at the OCC, when the idea of a charter was allegedly raise but no spokesmen for Coinbase confirmed.
Additional companies that oversee this area of banking, like the Federal Deposit Insurance Corp., has been approached by crypto firms. Ivy Koin was one of those first, but they are not planning to become certified with a bank charter. Unfortunately, even as crypto platforms try to cross into this adaption, the big issue continues to be in how prone to attack these securities can be.
Paving The Way For Other Crypto Platforms
One of the big advantages that enthusiasts of the crypto world acknowledge is the way that it may make room for more investment opportunities. Since many banks have remained uninvolved in crypto types of transactions, platforms have taken their own strides. However, all of these opportunities quickly end without the ability to get federal licenses and major investors. Allaire explained,
“The regulators need to figure this out because eventually other banks that they regulate are going to want to hold crypto. We can be a great guinea pig.”
Concerns From SEC And Other Federal Regulators
A major concern for SEC Chairman Jay Clayton is that there are unregistered securities with ICOs in the crypto community. Essentially, the tokens that are unregistered would need to become registered, though it is not as simple as that simple task.
Circle’s end game is to become an ATS, which can be done through applying or by purchasing a platform with that as the current status. Recently, they bought Poloniex Inc., which handles plenty of coins and margin trading. However, they have delisted some of the tokens in order to modify to the SEC guidance.