Circle’s Bold US Trust Bank Play: How It Could Reshape USDT Dominance and Stablecoin Wars

Stablecoin giant Circle just made a power move—and the crypto world is buzzing. Their bid for a US trust bank charter isn’t just paperwork; it’s a direct challenge to Tether’s throne.

Why? Because banking infrastructure is the ultimate stablecoin moat. Control the rails, and you control the game.

Here’s the kicker: If approved, Circle could bypass traditional banking bottlenecks—slashing settlement times and minting USDC with regulatory blessing. Meanwhile, rivals like USDT cling to shadowy reserves and offshore loopholes.

But let’s not pop champagne yet. Remember when everyone thought Libra would revolutionize finance? *Sips tea* Regulatory hurdles loom large, and the Fed’s watching like a hawk.

One thing’s clear: The stablecoin endgame isn’t about tech—it’s about who owns the plumbing. And Circle just bet $50M (probably chump change for them) on becoming the Visa of crypto.

P.S. Watch out for the ‘accidental’ bank run on USDT if this gets approved. Wall Street’s playbook loves a good panic.

Circle’s Trust Bank Could Change the Stablecoin Market

If approved by the OCC, Circle’s new entity—First National Digital Currency Bank—would allow the company to custody its own reserves. 

Also, it WOULD be permitted to hold digital assets like tokenized bonds and stocks on behalf of institutional clients.

However, the trust bank license will not allow Circle to take deposits or issue loans.

Today, we announced an important and significant milestone in our journey towards building the internet financial system with our official OCC National Trust Bank charter application for First National Digital Currency Bank, N.A.
https://t.co/Zx4bWGy388

This marks a strategic regulatory step following Circle’s IPO earlier this month, which valued the company at nearly $18 billion. 

More importantly, it signals Circle’s intent to align with forthcoming US stablecoin regulation.

Tether’s USDT still dominates the global stablecoin market, with a 62.5% share. Much of that usage occurs outside US borders, especially across Asia. 

USDT’s popularity comes from its liquidity and DEEP exchange integrations. But in the US, the regulatory space is shifting.

Congress is preparing to pass the GENIUS Act into law. This landmark stablecoin bill requires issuers to hold fully backed reserves and obtain federal licenses. 

Once passed, only licensed firms like National Trust Banks would be allowed to issue stablecoins at scale. This gives Circle a first-mover advantage.

Tether’s USDT Still Dominates—But for How Long?

By becoming a national trust bank, Circle positions USDC as a fully compliant, US-regulated stablecoin. 

It would likely become the preferred choice for banks, fintechs, and regulated institutions looking to integrate stablecoins.

Meanwhile, Tether operates under an El Salvador registration and is not regulated under US federal frameworks. 

That gap could become more problematic if US exchanges are required to delist or restrict access to unlicensed stablecoins.

Circle’s strategy goes beyond regulation. It aims to control more of its infrastructure by directly managing USDC reserves, rather than relying on custodians like BNY Mellon. 

The trust license would also allow Circle to serve institutional clients seeking to custody tokenized stocks and bonds—not just crypto.

This positions Circle to lead in the next phase of stablecoin adoption, as tokenized assets and real-world applications grow.

For everyday users, this could mean broader USDC integration in wallets, payment apps, and financial services. As regulation tightens, US-based platforms may shift preference from USDT to USDC. 

To sum it up, USDC could:

• Be used more in tokenized finance (real estate, stocks).
  
• See better integration with banking apps and neobanks.
  
• Offer stronger consumer protections under US law.

Tether still holds global dominance. But Circle’s trust bank application could shift the balance within US markets. 

In the coming months, the US may have to choose between offshore liquidity and onshore compliance. Circle just made its move.