CryptoSlate
Circle won final OCC approval on July 10 to open a national trust bank, giving USDC a federal supervisory home for custody and fiduciary services while keeping the stablecoin issuer's reserve and issuance functions separate. As of July 13, USDC circulation sat at $72.95B against roughly $73.15B in reserves, with about 84% of that reserve parked in overnight reverse Treasury repo and T-bills under three months, and only about 16% held as bank deposits.
Why it matters
The charter is not a full banking license. Circle National Trust can hold custody for Circle and affiliates and reserves a future lane for reserve management, but it does not gather insured deposits or make loans. What it does is legitimize USDC inside the institutional plumbing banks, payment firms, asset managers, and corporate treasury desks already use. Standard Chartered told clients in January that stablecoin adoption could pull roughly $500B out of US bank deposits by the end of 2028, the kind of headline that turns a regulatory footnote into a funding-stress scenario for community lenders.
Market impact
The Federal Reserve's December 2025 FEDS Note sets the lending drag between $65B and $1.26T depending on three variables: where stablecoin demand comes from, what balances it crowds out, and where issuers park reserves. Even the lower end matters: when 84% of a $73B reserve sits in repo and short-dated Treasuries, the dollars stay inside the financial system but migrate away from cheap deposit funding into government-backed paper, which is why regional banks are already racing to issue tokenized deposits and bank-backed stablecoins of their own. Circle's win is real, and so is the funding fight it just made louder.
Frequently asked questions
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What did the OCC actually approve for Circle on July 10?
The OCC gave final approval for Circle National Trust, a federally supervised trust bank limited to fiduciary and custody services for Circle and its affiliates. It is not a full banking charter, so the entity cannot gather insured deposits or make loans.
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How big is the deposit-drain warning tied to stablecoins?
Standard Chartered told clients in January that stablecoins could pull roughly $500B out of US bank deposits by the end of 2028, and the Federal Reserve's December 2025 FEDS Note put the lending drag anywhere from $65B to $1.26T depending on adoption depth, the balances being replaced, and where issuers park reserves.
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What does USDC's reserve mix look like today?
As of July 13, USDC circulation was $72.95B against roughly $73.15B in reserves. About $11.55B sat in bank deposits, while about $61.60B was held in overnight reverse Treasury repo and T-bills under three months, concentrating reserve cash in government-backed paper rather than ordinary deposit funding.
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Why do community banks care if reserves stay in the system?
The dollars do not disappear, but the funding does. When reserves migrate from regional deposit accounts into repo and short Treasuries, smaller banks lose a cheap, stable funding source and face harder choices between paying up for deposits, tapping wholesale markets, slowing balance-sheet growth, or lending less.
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How are banks responding to the competitive threat?
Major and regional banks are racing to issue tokenized deposits and bank-backed stablecoins of their own, treating stablecoins as a direct threat to their deposit franchise and moving to offer similar onchain cash products before USDC can absorb the institutional flow Circle's new charter is built to attract.
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