Circle, a cryptocurrency startup, intends to apply for a license to become a fully regulated commercial bank in the United States as it seeks to tap into the highly regulated U.S banks and brokerage market.

Registration at SEC

According to reports, Circle, which currently specializes in offering digital currency wallets as well investment platform plus an OTC crypto trading service will file an application seeking to register with the Securities and Exchange Commission (SEC) as a trading platform and brokerage. The move, according to a report by Bloomberg, is motivated by the need to expand its service portfolio, as well as facilitate buying and selling of tokens, which are categorized as securities.

These strategies were highlighted by the company’s leaders, including Jeremy Allaire, the Chief Executive Officer during an interview with Bloomberg. The company, which is supported by Goldman Sachs, has evidently taken a difficult and uncertain terrain. No company has ever come from the unregulated cryptocurrency industry and obtained such a status.

Going through regulatory complexities

To succeed in its plans, the company will undergo the strict scrutiny involved in applying for a banking license. Additionally, the move is likely to divide financial regulators as the application would mean that state rules covering crypto are overlooked.

Officials of Circle have indicated that they have had preliminary talks with the Office of the Comptroller of the Currency to discuss the banking function along with staff from the SEC, as well as officials from the Financial Industry Regulatory Authority, which regulates oversees brokerages.

The company has indicated that it will be pursuing SEC regulation followed by a banking license at a later date.

Opening a window to access Fed reserves

By securing a bank charter, Circle would reduce its dependence on traditional lenders and would be able to hold assets from customers in the form of digital coins. Additionally, it would be able to hold government-issued currencies like the US dollar. This could boost then company’s other financial systems.

According to Allaire, the company will be able to directly access the central banking system without using intermediaries, access reserves with the Federal Reserve and be able to directly transact with other banks.