Circle unit wins New York limited-purpose trust charter

Circle announced Friday that its subsidiary, Circle Internet Trust Company LLC, has been granted a limited-purpose trust charter by the New York Department of Financial Services. The authorization lets the company exercise fiduciary powers in New York but does not permit accepting deposits or making loans.

Under New York Banking Law, a limited-purpose trust charter permits firms to offer custodial services, investment management, corporate trust functions, transfer agency and securities clearance. Charter holders do not receive the full set of bank powers such as deposit-taking or lending. The NYDFS said some applicants under this framework pursue activities related to virtual currency, including stablecoin operations and custody of digital assets.

The authorization applies to the Circle unit that issues the US dollar-pegged stablecoin USDC. USDC has a market capitalization of about $71.8 billion, ranking it as the second-largest stablecoin behind Tether’s USDT and the fifth-largest cryptocurrency by market value. Circle issues tokens backed by dollar-denominated reserves and provides custody and settlement services that can fall under the fiduciary activities allowed by the charter.

Jeremy Allaire, Circle’s chief executive, described the New York trust charter as a longstanding objective and cited the regulatory clarity it provides. Circle previously received the NYDFS BitLicense in 2015, which authorized certain virtual currency business activities in New York.

Entities granted limited-purpose trust charters must follow state rules on fiduciary duties, custody, recordkeeping and other trust-related responsibilities. The framework is aimed at firms that need trust powers without the full range of bank functions.