Stablecoin major Circle announced on Friday that it was granted a trust charter by the New York Department of Financial Services (NYDFS). The development will allow Circle to act as a trustee and custodian, holding assets for institutional and corporate clients in accordance with standard banking-laws.
Circle, in its announcement said, that it will be focussing on deepening its fiduciary services within New York in the coming months. These services would include asset safeguarding and wealth management alongside custodian operations, and stablecoin offerings.
Before this approval, Circle was handling activities like USDC minting and transfers as a payment provider. With this trust charter, however, the company will be able to hold reserve backing and client assets as a regulated trustee.
“Earning a New York trust charter has been a longstanding objective for Circle given the regulatory clarity that comes with it,” said Jeremy Allaire, Co-Founder, Chairman, and CEO of Circle commenting on the development.
For Circle, this development increases its room for adoption in the New York state, where its main market rival Tether is banned.
In 2021, Tether’s parent firm iFinex was fined for $18.5 million by the New York Attorney General (NYAG) in a case regarding transparency and reserve backing. Since then, the USDT-issuer has been prohibited from running businesses with New York-based entities.
Tether’s USDT, otherwise, is the world’s largest stablecoin in terms of market cap. At the time of writing, its valuation stood at $183.5 billion. Circle’s USDC is the second-largest stablecoin globally with a market cap of $71.8 billion as of press time.
In the absence of Tether as its competition in New York, Circle now has sole access to a vast playground to cement USDC as the premier stablecoin in the state while positioning itself as a trusted custodian for institutional crypto investors.
New York City is Circle’s headquarter. The company’s relationship with the New York state authorities started over a decade ago in 2015 when the NYDFS had granted it its BitLicense under which the state authorities govern digital asset activities.
“This charter reflects over a decade of regulatory commitment and positions USDC within a strong, respected framework as digital dollars become central to the global financial system,” Allaire added.
