Crypto Startup Circle Seeks US Federal Banking License

Announcements, News | June 7, 2018 By:

Cryptocurrency platform Circle is currently in talks with US regulators about pursuing a federal banking license and registering as a brokerage and trading venue.

Founded in 2013, Circle is a peer-to-peer payments technology company. It claims it is one of the most well-funded blockchain startups, with investors including Goldman Sachs Group and Baidu. It offers four products: Circle Invest, which allows users to easily invest in crypto; Circle Pay, which allows users to send money like a text; Circle Trade, the company’s OTC trading desk; and Poloniex, which allows users to buy and sell on its active crypto exchanges.

In an interview with Bloomberg, Circle CEO Jeremy Allaire said that the company is pursuing both a federal banking license with the Office of the Comptroller of the Currency (OCC) and registration as a securities exchange with the US Securities and Exchange Commission (SEC).

Allaire said that obtaining a banking license would cut down on the amount of regulators the platform needed to work with. It could also permit the company to plug into other components of the financial system.

“To hold reserves with the Federal Reserve, to natively access the central-banking 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,” Allaire said.

Allaire added that the company would also provide regulators with a “great guinea pig” in explorations of regulatory frameworks.

“The regulators need to figure this out because eventually other banks that they regulate are going to want to hold crypto,” Circle CEO Allaire said. “We can be a great guinea pig.”

The company said it would likely seek SEC regulation before moving to apply for the banking license, noting that registration with the regulator will allow the platform to facilitate trades for assets that the SEC deems to be securities, such as some initial coin offering (ICO) tokens.

Allaire said Poloniex already de-listed numerous tokens to conform with SEC guidance issued last year and could remove more if they move forward with the SEC.

“We’re making our own legal determinations because you can’t call up the SEC and say, ‘Is this a security or not?’” he said. “You can expect to see us de-list further things and that’s the prudent thing to do.”