Circle - A Goldman Sachs-backed Cryptocurrency Giant Seeks a U.S Banking License
Circle Internet Finance Ltd. - a cryptocurrency start-up backed by Wall Street giant Goldman Sachs is now looking for a federal banking license with the Office of the Comptroller of the Currency (OCC). According to the latest report from Bloomberg, Circle is also in talks with the U.S Securities and Exchange Commission (SEC) for getting registered as a brokerage and trading exchange.
At present, Circle offers different services in the digital currency space like a cryptocurrency wallet and investment platform and also an over-the-counter (OTC) crypto trading service for institutional investors.
If circle succeeds in getting the banking as well as the registration licenses, it will allow the firm to trade digital currency tokens which are considered as securities in the U.S without the need of registering as a cryptocurrency firm with the regulatory bodies of all the different 50 states in the country.
During a recent interview with Bloomberg, Circle CEO Jeremy Allaire said that the company is confident and hopes that it is the first digital currency firm to receive such a license at the federal level. Allaire said: “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.”
He further added that “The regulators need to figure this out because eventually other banks that they regulate are going to want to hold crypto. They’re going to need to have rules for this. We can be a great guinea pig.”
During the interview, Allaire also stated that Circle would majorly focus on SEC regulations before seeking such a license considering the fact that SEC will allow only those tokens to be sold that are regarded as securities.
He also stated that the company has already started delisting the tokens from the digital token platform Poloniex. These tokens are the ones which do not fall under the SEC guidelines. He said: “We’re making our own legal determinations because you can’t call up the SEC and say, ‘Is this a security or not?’ You can expect to see us delist further things and that’s the prudent thing to do.”
Getting a federal license helps a crypto exchange to preempt from state-level regulations. However, this also means that the exchange will remain under tight regulatory scrutiny and oversight and thus many finch startups also prefer to deal with the local state-level regulations.
At an industry conference earlier this year, Joseph Otting Comptroller of the Currency said: “Most fintechs come to us because they have heard of this thing called a national banking charter that gives them pre-emption across state lines. When they come and they speak to us, and they understand what it really takes to be a bank, they kind of glaze over and often leave skid marks leaving the building.”