Circle filed to become a U.S. national trust bank

Circle wants a national trust bank. That’s the play. After its stock exploded post-IPO, the company filed a formal request on Monday with the Office of the Comptroller of the Currency (OCC) to launch what it’s calling First National Digital Currency Bank, N.A.

If it’s approved, Circle would finally have the legal power to custody its own $60 billion reserves directly, without middlemen.

The reserves backing Circle’s USDC, the second-largest stablecoin by market value, include cash and short-dated US Treasuries, based on the company’s latest attestation from June 26.

This bank license would make Circle only the second crypto company ever approved for a national trust charter, following Anchorage, which was conditionally cleared by regulators in 2021 to become Anchorage Digital Bank.

Circle’s stock explodes after IPO, then takes heat from Wall Street

This push for a national bank comes as Circle is riding a serious high in the stock market. Since its IPO earlier this month, the firm’s shares have surged more than 5x, jumping from its $31 offering price to as high as $298.99 during a buying frenzy that followed the US Senate’s June 17 passage of stablecoin legislation.

That optimism has triggered a wave of activity across the industry, with Fiserv and Mastercard both announcing further stablecoin efforts. Amazon and Walmart are reportedly looking into launching their own stablecoins as well.

But JPMorgan, which underwrote Circle’s IPO, isn’t convinced the rally is sustainable. Analyst Kenneth Worthington launched coverage with an underweight rating and the lowest price target on Wall Street at $80, calling the current price unsustainable and flagging growing competition as a key concern.

“We see competition as a potential threat to Circle,” Kenneth wrote. “The risk is that a few will succeed in taking enough share to reach critical mass in a business with low switching costs, allowing them to leverage the network built by Circle.”

Kenneth pointed to the rise of tokenized deposit accounts and digital money market funds as signs that new players are lining up to challenge Circle’s foothold in the stablecoin space. The same laws that sent Circle’s stock soaring could also open the door to rivals with better infrastructure or stronger traditional finance backing.

Analysts split over Circle as regulations, valuations collide

Not every analyst agrees on where Circle’s stock is heading. The company currently trades at a price-to-earnings ratio over 120, a level that’s drawn comparisons to Tesla and AI stocks from bullish analysts. Out of those tracked by Bloomberg, six have a buy rating, six say hold, and two are urging a sell.

At Deutsche Bank, analyst Brian Bedell gave it a hold, warning that the stock is likely to be volatile for the foreseeable future. “While we see potential for strong long-term industry adoption of stablecoins, the range of outcomes are very wide & likely to create substantial volatility in earnings revisions and the share price for at least the near-to-intermediate term,” Brian wrote in a note.

Needham is backing the stock, calling Circle a long-term play that deserves its premium valuation due to what it called the “paradigm shift” in crypto finance. Barclays analyst Ramsey El-Assal also leaned bullish, starting coverage with an overweight rating and a $215 target. Ramsey said the company’s unique status as one of the few public stablecoin-focused companies puts it in a good position to soak up capital as regulation firms up.

Ramsey expects Circle’s USDC to grow beyond its crypto roots and move into traditional finance—especially in areas like payments, international transfers, and remittances. But all of this hinges on what happens next in Washington.

But Circle isn’t new to navigating US regulation. It picked up a BitLicense from New York way back in 2015 and holds money transmitter licenses across multiple states. The national charter would be the crown jewel of that regulatory stack, giving it deeper access to institutional money and letting it bypass reliance on third-party custodians.

But the market isn’t giving the company a free ride. Circle’s shares dropped 25% last week, the first full-week loss since going public. They rebounded on Monday, jumping 6.7%, but the swings show that volatility is far from over.

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