The cryptocurrency fintech services company, Circle, part of the Centre consortium, the issuer of USD Coin, has revealed in a blog post yesterday that it intends to become a full-reserve national commercial bank. The announcement was made by its CEO Jeremy Allaire in a post where he explained the journey the company would have to undergo to reach that goal. Allaire stated that, since its inception, Circle has intended to become a financial institution.
Full reserve national bank could lead to a more resilient financial system.
Jeremy Allaire stated, “We believe that full-reserve banking, built on digital currency technology, can lead to not just a radically more efficient, but also a safer, more resilient financial system.” The crypto company is embarking on this new journey because it anticipates a boom in the growth of USDC that will ostensibly be a crucial asset in the future of the cryptocurrency market. The CEO further stated that it is important to establish standards for these currencies. Bitcoin and other cryptocurrencies have gained a lot of mainstream exposure this year.
Allaire also addressed USD Coin and the controversy around it.
Allaire also addressed the worries of some customers and analysts in the cryptocurrency market, who have questioned that USD Coin is not fully backed 1:1 by cash or cash equivalents. The CEO recognizes that while the company has strived to maintain a high level of transparency, publishing attestations of its holdings, critics have valid points when it comes to “fundamental questions of liquidity, including liquidity in times of intense demand to redeem USDC.” Allaire stated that now Circle will “begin to publish information about the fundamental liquidity of USDC and our liquidity coverage under Basel III,” a protocol that defines the Liquidity Coverage Ratio banks must maintain to serve users in high-stress periods.