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Major players in the cryptocurrency sphere, including stablecoin issuer Circle and crypto custodian BitGo, are reportedly exploring the possibility of obtaining bank charters or licenses in the United States. This development, highlighted in a Wall Street Journal report, signals a potential shift in how these firms intend to operate within the evolving regulatory landscape. Other prominent companies mentioned include Coinbase and Paxos, which already has preliminary approval for a US bank charter.
This interest in traditional banking structures emerges as the US refines its approach to stablecoin regulation. Federal Reserve Chair Jerome Powell recently acknowledged the growing mainstream adoption of digital assets and the need for a clear legal framework for stablecoins. His remarks recognized the consumer appeal of stablecoins following a period of market instability. This aligns with recent legislative activity aimed at providing clarity and oversight.
Also Read: Circle Files for IPO Under ‘CRCL’ After 15.9% Revenue Growth in 2024—What Should Investors Expect ?
US Lawmakers Advance Competing Stablecoin Bills
The US House Financial Services Committee recently passed the STABLE Act, progressing alongside the GENIUS Act, which had previously cleared the Senate Banking Committee. While both bills aim to regulate stablecoins, they differ in their proposed approaches. The STABLE Act emphasizes robust federal oversight, while the GENIUS Act seeks a more flexible regulatory environment. Notably, the GENIUS Act also incorporates stricter AML safeguards and reserve requirements.
The Allure and Implications of a Bank Charter for Crypto Firms
The pursuit of bank charters could enable cryptocurrency firms to function more like traditional financial institutions. However, this transition would also subject them to significantly stricter reporting requirements and regulatory scrutiny. The reported interest from major crypto firms suggests a strategic move to solidify their operations within a regulated framework and potentially expand their service offerings, a trend that gained momentum previously.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
