Multiple issuers are applying for US trust licenses, is the stablecoin industry making a land grab?

In just four days, two major stablecoin giants have launched a critical Compliance sprint in the U.S. financial regulatory system.

Written by: Pzai, Foresight News

On June 30, stablecoin issuer Circle submitted an application for a national trust bank charter to the Office of the Comptroller of the Currency (OCC) in the United States, planning to establish a national trust bank in the US; on July 2, Ripple followed suit by submitting an application for a national bank charter, after its subsidiary Standard Custody also applied for a Federal Reserve master account, intending to directly custody RLUSD reserves. In just four days, the two major stablecoin giants launched critical compliance efforts within the US financial regulatory system.

As one of the important financial strategies during Trump's term, the payment of stablecoins coincides with the potential demand for U.S. Treasury bonds under the dollar system. In the current rapid establishment of the stablecoin industry, why does the stablecoin sector favor American licenses?

GENIUS Bill Catalyst: Federal License Becomes a Matter of Life and Death

The core driving force behind this licensing battle is the "GENIUS Act" (Guiding and Establishing National Innovation for US Stablecoins Act) passed by the US Senate in mid-June. This act systematically stipulates for the first time that stablecoin issuers must become "licensed payment stablecoin issuers" and must meet federal or state regulatory requirements.

Two key provisions in the bill directly drove the license application actions of issuers:

Custodial asset segregation requirements

• The reserve assets of compliance stablecoins must be independently custodied, prohibited from being mixed with the issuer's own funds, and limited to investments in cash, short-term U.S. Treasury bonds, and other highly liquid assets, with a complete ban on re-pledging or leverage operations.
• In the event of the issuer's bankruptcy, the reserve assets will be prioritized for repayment to the coin holders as trust property, taking precedence over general creditors.

Qualification Threshold for Financial Institutions

• Issuers must hold federal (OCC/Fed/FDIC) or "substantially equivalent" state licenses; unlicensed entities are prohibited from operating in the U.S.
• Segmented Regulation by Scale: Stablecoin issuance of ≤ 10 billion USD can choose state licenses; exceeding this limit requires mandatory upgrade to federal licenses, otherwise, a reduction in scale is necessary.

The GENIUS Act positions stablecoins as payment tools rather than investment products through two major designs: "de-interesting" (prohibiting interest payments to users) and "technical backdoors" (mandatory built-in freeze/destroy functions), while also providing compliance intervention channels for law enforcement agencies.

As stablecoin issuers accelerate their integration into the mainstream financial system, the divide between state and federal regulatory frameworks is profoundly reshaping the competitive landscape of the industry. The fragmented regulation of state-level licenses has led issuers into compliance dilemmas — taking Ripple's RLUSD as an example, even after passing the stringent BitLicense review by the New York State Department of Financial Services (NYDFS), it still requires several months to repeatedly apply for licenses in states like California and Texas, with each state requiring an application fee ranging from $50,000 to $200,000 and the establishment of localized compliance teams. The regulatory discrepancies between states have further resulted in operational inefficiencies: the frequency of reserve asset audits varies from quarterly to semi-annually, and the disclosure standards differ significantly, while the regulatory differences between states force stablecoin businesses to design "lower rather than higher."

Ripple's OCC application this time goes even further. It will build upon the existing regulatory framework of the New York State Department of Financial Services (NYDFS) and overlay the federal level OCC regulation, aiming directly at a "state + federal" dual regulatory structure. If its subsidiary obtains a Federal Reserve master account qualification, the RLUSD reserves will be directly held within the Federal Reserve system. Having reserves at the federal level significantly reduces the compliance costs across jurisdictions, and Ripple's CEO Brad Garlinghouse has also claimed that this will establish a "new benchmark of trust" for the stablecoin market.

The 2023 Silicon Valley Bank (SVB) crisis caused Circle to have $3.3 billion in reserve funds trapped at SVB, which led to panic in the market and a brief de-pegging of USDC, nearly collapsing market confidence. The core purpose of Circle applying for a national trust bank license is to qualify for self-custody of its reserve funds, eliminating the need to rely on commercial banks for custody, and completely eliminating the risk of a "bank run contagion chain."

OCC not only realizes one-time access nationwide, but also reshapes the industry ecosystem through a threefold mechanism: stablecoin reserves are directly deposited in the central bank system, which will completely eliminate the risk of commercial bank failures and achieve real-time settlement; at the same time, it grants issuers SEC certified "qualified custodians" qualifications, to custody tokenized stocks and bonds for institutional clients, allowing Circle to participate in the digital asset custody market; more importantly, OCC automatically covers state money transmission licenses, uniformly applying its risk-weighted capital standards, avoiding regulatory universality issues caused by differences in capital adequacy ratios among states.

The pursuit of bank licenses by stablecoin issuers is not a day’s work, but a culmination of years of compliance exploration. Taking Circle as an example, it successfully obtained the first electronic money institution (EMI) license under the EU MiCA framework on July 2, 2024, allowing it to issue USDC and euro stablecoin EURC in compliance across 27 countries. In the Middle East, Circle obtained the principle license from Abu Dhabi MSB, targeting key on-chain settlement scenarios for oil dollar.

The high-threshold licensing system established by local regulatory agencies has created a strong barrier due to the high cost of Compliance arrangements. For example, the substantial capital requirement (350,000 euros) and operational reserves required by the EU's MiCA have led many small and medium-sized issuers to exit the market, while Circle has managed to seize the entry into the stablecoin market in the EU market with a population of 450 million, posing a dimensionality reduction attack on its competitors.

With the progress of license applications, the positioning of stablecoins has evolved from a mere medium of exchange to a core component of financial infrastructure. Circle's Chief Strategy Officer, Dante Disparte, stated that federal regulation will turn the company into a "USD on-chain executor," reshaping the way global dollar flows operate.