Circle has announced ambitious new plans: the financial giant plans to become the «national bank for digital currencies.» That is, Circle should be directly subordinate to the US Federal Reserve and other government agencies involved in financial transactions.
Circle CEO Jeremy Aller announced the new strategy on his blog and noted that the move to direct banking in customer service will strengthen the company’s USDC stablecoin.
We checked the actual data: to date, the capitalization of the USDC has already reached $ 27.5 billion. Most importantly, the share of cryptocurrency among the total capitalization of stablecoins has been increasing markedly over the past months.
If on January 1, 2021, USDC accounted for 14.43 percent of the entire market for coins pegged to the value of the dollar, then in August this figure reached 24.81 percent.
The graph of the change in the share of stablecoins
Accordingly, the presence of USDC on the market has become almost twice as noticeable.
Note that this trend was, among other things, caused by the reputation of Tether USDT, the issuer of which was repeatedly accused of not providing security for its project. In other words, the company allegedly released cryptocurrency out of thin air, without backing it up with real dollars in its own bank account.
And although in the spring the company has already passed the certification of assets, there are still questions for it. In particular, representatives of the cryptocurrency community do not understand why Tether representatives do not want to conduct a full audit with the participation of world famous companies.
By the way, the share of USDT in the market for the above period decreased from 74.99 percent on January 1, 2021 to 57 percent in August.
Cryptocurrencies Go Global
Circle currently operates under government money transfer regulations. They are less stringent than those required by national banks. If the new strategy succeeds, Circle Bank will operate under the control of the Federal Reserve, the US Treasury, the Office of the Comptroller (OCC) and the Federal Deposit Insurance Corporation (FDIC).
Growth of USDC capitalization over the last year
Here is a quote from the official blog of the company, in which its representatives shared their attitude to what is happening. The replica is provided by Coindesk.
We will travel this path together with leading US financial regulators. They are working through the President’s Financial Markets Working Group to better manage the risks and opportunities posed by digital currencies.
Accordingly, representatives of the company consider the digital assets industry very promising, however, they understand that the characteristics of a niche, such as sharp changes in exchange rates, can frighten off newcomers. Therefore, they want to limit the risks to their future users, which explains the desire to work more broadly.
CEO Circle Jeremy Aller
For the cryptocurrency industry, Circle’s entry to players of this size will be unambiguously positive. Now the company’s stablecoin is one of the most popular among cryptoinvestors and, in fact, the very stability of Bitcoin and other digital assets depends on its stable position in the eyes of regulators .
Note that this is not the first time that cryptocurrency companies have been thinking about the prospects of becoming a bank. For example, in September 2020, the Kraken trading platform received a license to create its own bank in the United States. In the future, she will be able to store digital assets on behalf of clients, as well as pay them salaries in cryptocurrencies. You can read more about this in a separate article.
This situation clearly proves that the crypt is gradually moving from free self-regulation to national infrastructures. Previously, a strategy similar to Circle has already been implemented by cryptocurrency companies Paxos and Anchorage, which only increased the confidence of large investors in a good future for the crypto.
We believe that the prospects for the formation of similar companies related to digital assets will not only improve the reputation of the coin niche, but also create a solid foundation for a full-fledged global transition to cryptocurrencies in the future.
