Analysis: Why Ripple and Circle's application to become banks is so important

According to DL News, the two major stablecoin issuers in the cryptocurrency field, Ripple and Circle, have both applied for a U.S. National Trust Bank license. If approved, this would subject them to federal regulation and bring them closer to the core of the U.S. financial system. Obtaining the license would place these companies under the supervision of the Office of the Comptroller of the Currency (OCC), requiring them to adhere to the same capital, liquidity, and risk standards as traditional banks. Chris Colson, a payment expert at the Atlanta Federal Reserve, stated that this is significant for cryptocurrencies, primarily because it demonstrates that stablecoins are truly entering the financial mainstream. Additionally, obtaining a bank license means these companies can act as federally regulated custodians, hold stablecoin reserves, and potentially access the Federal Reserve's real-time payment system. He emphasized that "Circle and Ripple's actions blur the lines between financial technology and traditional banking," posing a major competitive threat to existing banks.