Peer-to-peer payments company Circle has announced plans of turning into a full-reserve national digital currency bank in the United States.
This essentially means that banks have to keep the full amount of each depositor’s funds in cash and cash equivalents, ready for instant withdrawal on demand.
Also known as 100% reserve banking, full-reserve banking gives an alternative to a system in which only a fraction of bank deposits are backed by actual cash on hand and available for withdrawal.
“As we move towards national bank-level regulatory supervision we will begin to publish information about the fundamental liquidity of USDC and our liquidity coverage under Basel III,” the announcement states.
According to the official announcement, the company’s co-founder and CEO Jeremy Allaire revealed that Circle is willing to operate under the supervision and risk management requirements of the Federal Reserve, the US Treasury, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation.
“We believe that full-reserve banking, built on digital currency technology, can lead to not just a radically more efficient, but also a safer, more resilient financial system,” Allaire explained.
USDC to grow to hundreds of billions of dollars in circulation
He added that this Goldman Sachs-backed digital payment company expects that its own stablecoin, USD Coin (USDC), grows to “hundreds of billions of dollars in circulation,” supporting high-trust economic activity and turning into a popular tool in financial services and internet commerce applications.
“Establishing national regulatory standards for dollar digital currencies is crucial to enabling the potential of digital currencies in the real economy, including standards for reserve management and composition,” Allaire commented.
“We are embarking on this journey alongside the efforts of the top U.S. financial regulators, who through the President’s Working Group on Financial Markets are seeking to better manage the risks and opportunities posed by large-scale private-sector dollar digital currencies,” he added.
In connection with the proposed transaction between Circle and Concord Acquisition Corp, Circle Acquisition Public Limited Company has filed a Registration Statement on Form S-4 with the SEC, which involves a proxy statement of Concord in connection with Concord’s solicitation of proxies for the vote by Concord’s shareholders with respect to the proposed transaction and a prospectus of Circle. Concord also will file other documents regarding the proposed transaction with the SEC.
Circle is famous mostly for creating USDC, the world’s second-largest stablecoin by market capitalization after Tether (USDT). At the time of writing, USDC is the eighth largest cryptocurrency with a market value of $27.9 billion, according to data from CoinMarketCap.