Stablecoin issuer Circle’s application for a national trust bank charter should be denied because of the company’s poor track record of compliance and the high likelihood it would harm consumers and communities, three dozen community organizations wrote Wednesday to regulators.
“This would be the most dangerous banking charter of the 21st century, if regulators are careless enough to grant Circle’s application,” said Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition. “We’d be concerned about any stablecoin issuer becoming a bank, but Circle’s case is particularly egregious. We’re talking about a company with a habit of flouting money-laundering rules and serious allegations of deceiving customers.”
The letter notes six separate enforcement actions by state and federal regulators who found Circle or its affiliates had broken rules for money transmitters, alongside a class-action lawsuit accusing the company of misleading solicitations to customers.
Two Circle affiliates have faced enforcement action from the Securities Exchange Commission (SEC), the Office of Foreign Asset Control (OFAC), the Financial Industry Regulatory Authority (FINRA) and the states of Connecticut, Florida and Vermont. Circle subsequently sold one of those former subsidiaries, Poloniex. The other is SI Securities, which Circle maintains control of through another LLC owned solely by Circle. SI Securities also currently faces a class-action lawsuit over its email solicitation practices.
These patterns of compliance violations and evasive public damage control efforts indicate Circle would not run a responsible bank and should be denied a charter, the letter argues.
NCRC’s letter also describes the inherent risk across the stablecoin industry that national trust bank charters would be misused for regulatory arbitrage and to harvest new revenue without corresponding protections and benefits for customers. National trust bank charters for stablecoin issuers would also raise systemic risks for the entire economy, the letter notes.
The following organizations co-signed the letter with NCRC:
- African-American Trade Association (AATA)
- Acts Housing
- Affordable Homeownership Foundation Inc.
- African Community Housing & Development
- State Representative Kelvin Datcher, Alabama House of Representatives – District 52
- Americans for Financial Reform
- Baltimore Community Lending
- CASA of Oregon
- Community Housing of Wyandotte County (CHWC), Inc.
- Clover Inc.
- Delaware Community Reinvestment Action Council
- East LA Community Corporation
- Fair Finance Watch
- Fair Housing Center of Central Indiana
- Genesee Co-op FCU
- Georgia Advancing Communities Together
- Georgia WAND Education Fund, Inc.
- Harlingen Community Development Corporation
- Home Repair Resource Center
- Homes on the Hill, CDC
- Homestead Resources
- Housing Authority of the City of High Point, NC
- Housing Oregon
- National Consumer Law Center
- NCRC Community Development Fund
- New Jersey Citizen Action
- Northwest Indiana Reinvestment Alliance
- Northwest Counseling Service (NWCS), Inc.
- Public Citizen
- Reinvestment Partners
- Rise Economy
- Rural Housing Coalition of New York
- United South Broadway Corporation
- Universal Housing Solutions CDC
- Utah Housing Coalition
- Welfare Reform Liaison Project, Inc.
- Woodstock Institute
