Key Points
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The Office of the Comptroller of the Currency gave Circle final approval on Friday to open a national trust bank.
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The charter enables federally regulated custody upon opening and management of the USDC reserve later.
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Circle’s first-quarter net income fell 15% year over year even as USDC in circulation grew 28%.
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Circle (NYSE: CRCL) said Friday that it received final approval from the Office of the Comptroller of the Currency (OCC) to open First National Digital Currency Bank, N.A., a national trust bank that will operate as Circle National Trust. Investors liked the news, sending the stablecoin issuer’s shares up about 5% by the time the market closed.
The enthusiasm is understandable. Circle issues USDC, a digital token designed to maintain a value of $1. And the company’s whole strategy is built on regulation and transparency, in an industry that historically ran short of both — so a national trust bank charter is about as strong a stamp of federal legitimacy as a crypto company can get.
But shares remain about 75% below their 52-week high of $262.97 as of this writing — a peak reached in the months after the company’s June 2025 initial public offering (IPO). So the question worth asking is whether the charter changes the economics that drove the stock down in the first place.
What the charter actually does
The new bank will give Circle a federally regulated home for digital asset custody upon opening, starting with services for Circle and its own affiliates. The company said the bank may eventually offer custody directly to a limited number of institutional customers, such as banks.
More important, the charter is designed to eventually allow the bank to manage the USDC reserve (the pool of assets backing every token in circulation), bringing that critical function under direct federal oversight.
“OCC approval to establish Circle National Trust marks a defining step in bringing blockchain technology and digital assets into the core of the U.S. financial system,” said Circle CEO Jeremy Allaire in the company’s press release about the approval.
Timing matters here. After all, the GENIUS Act, the federal stablecoin law enacted last July, is pushing the industry toward exactly this kind of federal supervision. And Circle has been positioning for it for a while, applying for the charter on June 30, 2025, and securing conditional approval in December.
Circle isn’t the only one making this move, however. In December, the OCC conditionally approved five national trust bank charter applications at once — Circle’s application, plus applications tied to Ripple, Paxos, BitGo, and Fidelity Digital Assets.
Federal approval, in other words, is quickly becoming something the whole industry pursues, not an edge only Circle holds.
The math the charter doesn’t change
Circle’s first-quarter results show both the promise and the problem. USDC in circulation ended the quarter at $77.0 billion, up 28% year over year, and USDC handled $21.5 trillion in onchain transaction volume during the period, up 263%. Total revenue and reserve income rose 20% year over year to $694 million. Almost all of that ($653 million) was reserve income, the interest Circle earns on the cash and short-term treasuries backing USDC. In plain terms, this is largely a business whose revenue rises and falls with short-term interest rates and the amount of USDC outstanding.
And the growth is decelerating. Circle’s total revenue and reserve income rose 77% year over year in the fourth quarter of 2025, so the first quarter’s 20% growth marked a sharp step down. USDC in circulation tells the same story, growing 72% year over year as of the end of 2025 but 28% as of the end of the first quarter.
My bigger concern is distribution costs, the payments Circle makes to partners that help put USDC into circulation. Distribution, transaction, and other costs totaled $407 million in the first quarter, consuming almost 60% of total revenue and reserve income.
Circle said growth in revenue less distribution costs was offset by higher stock-based compensation and continued investment in product, distribution, and operating infrastructure, helping explain why net income fell 15% year over year to $55 million, even as the business grew.
Circle keeps a surprisingly thin slice of the income that its $77 billion in reserves generates.
Ultimately, the charter strengthens Circle’s regulatory standing. And moving reserve management inside a federally supervised bank could make USDC more attractive to the big financial institutions Circle is courting. That is meaningful long-term progress.
But a charter doesn’t lower distribution costs or make reserve income less sensitive to interest rates. It doesn’t restart growth that has been slowing, either. With a market capitalization of around $17 billion against $55 million of quarterly net income, the stock’s valuation arguably still asks investors to assume those problems get solved. The charter likely makes Circle a stronger company. I don’t think it makes the stock a buy yet, though, so I’ll watch from the sidelines until profits start scaling with USDC itself.
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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
