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FollowingCircle becomes a federal trust bank and receives OCC approval to operate First National Digital Currency Bank, N.A.
Just as bankers warn that stablecoins could withdraw as much as $500 billion from U.S. bank deposits by 2028, Circle has obtained approval from the Office of the Comptroller of the Currency (OCC) to become a federal trust bank responsible for running First National Digital Currency Bank, N.A. Circle's Federal Trust Bank milestone has given its USDC a federally regulated custody structure, while banks are working to slow the popularity of stablecoins.
Why is Circle Transformed Federal Trust Bank significant?
Circle announced on July 10, 2026 that it has received OCC approval to establish First National Digital Currency Bank, N.A., The company said the bank will operate under the name Circle National Trust. National trust banks have a narrower scope of business than commercial banks, providing custody and trusteeship services, but cannot absorb consumer deposits or issue loans-a distinction that still brings confidence to the market. Circle's shares rose about 14% in pre-market trading after the approval was announced.
Circle said the trust bank will initially provide entrusted digital asset custody services to Circle and its affiliates, and its charter is designed to support future management of USDC reserves under federal supervision. This path was made possible after the OCC's initial conditional approval on December 12, 2025, which determined that collateral custody, reserve management and digital asset custody activities were allowed for national trust banks.
The move is important because of the size of the USDC. Circle's flagship stablecoin is located in the stablecoin market with a total market value of approximately $310 billion. As it becomes a federally regulated U.S. trust bank, reserve regulation has taken on real systemic weight.
USDC market capitalization
US$73.18 billion-A snapshot of the current USDC market value provides real-time background for Circle's banking license milestones.
Circle CEO Jeremy Allaire said the approval marks a decisive step in integrating blockchain technology and digital assets into the heart of the U.S. financial system.
Why bankers say that stablecoins may withdraw US$500 billion
Reuters reported on January 28, 2026 that banks believe that the reward mechanism of stablecoins may trigger deposit outflows, and quoted Standard Chartered Bank's estimate that by the end of 2028, stablecoins may withdraw about US$500 billion from Bank of America.
Expected deposit transfers
US$500 billion-the amount of cumulative U.S. bank deposits that are expected to flow to stablecoins by the end of 2028.
The concern is competition: if idle cash is deposited in a checking account, it may turn into dollar-linked tokens. Standard Chartered believes U.S. regional banks are the most risky because they rely heavily on deposit-driven net interest margin income to maintain profits. Such a large transfer of funds would force banks to reprice financing costs or shrink their balance sheets, which is why banks view the spread of stablecoins as an immediate threat rather than a distant risk.
What does this mean for the cryptocurrency market and future regulation
The struggle has entered a political level. Reuters reported that the White House is convening banks and cryptocurrency companies to discuss federal market structure legislation and whether third parties can pay for stablecoins-a mechanism banks are most concerned about. Circle's federal charter has intensified the debate. A trust structure that conforms to federal standards will attract greater scrutiny of USDC reserve management and compliance, which is the activity the charter is designed to accommodate-once reserve management is activated as a future function.
For market participants, the signal is that even as bank lobbies try to limit deposit losses, stablecoin issuers are moving towards a regulated financial trajectory rather than moving away from it. The next sign to watch is the outcome of the earnings battle and any conditions the OCC attaches when Circle activates reserve management.
