Circle Applies for US Trust Bank License After Bumper IPO

Cryptocurrency

Summary:

Stablecoin firm Circle is applying to create a national trust bank in the U.S., a major move after its blockbuster IPO valued the company at nearly $18 billion earlier this month.

If the charter is granted by the U.S. Office of the Comptroller of the Currency, it would enable Circle to act as a custodian for its own reserves and hold crypto assets on behalf of institutional clients. Unlike traditional banks, the license would not allow Circle to take cash deposits or make loans.

"Circle has long sought to seek the highest standards of trust, transparency, governance, compliance," CEO Jeremy Allaire told Reuters in an interview. "Becoming a publicly traded company is a significant part of that, becoming a national trust company is again a continuation of that."

Circle's national trust bank entity would be called First National Digital Currency Bank, N.A.

Crypto platform Anchorage Digital is currently the only digital asset company with a national trust bank charter.

Circle issues the dollar-pegged stablecoin USDC. Stablecoins, a type of cryptocurrency designed to maintain a constant value, usually a 1:1 dollar peg, are commonly used by crypto traders to move funds between tokens. Their use has grown rapidly in recent years, and proponents say that they could be used to send payments instantly.

Stablecoins are backed by assets such as U.S. dollars and short-term Treasury bills in order to maintain their peg to the dollar. Currently, Circle's reserves — short-dated U.S. Treasury bills, overnight U.S. Treasury repurchase agreements and cash — are held in custody at BNY and managed by BlackRock.

The new entity would manage Circle’s USDC reserves, although some reserves will continue to be held at major banks, Allaire said.

The license would also allow Circle to provide custody services for digital assets on behalf of institutional customers. However, Allaire said it will focus on providing custody for assets like stocks and bonds that are represented via a token on a blockchain network, over traditional cryptocurrencies like bitcoin and ether.

GOING MAINSTREAM

The move from Circle comes as Congress gets closer to passing a bill to create a federal regulatory framework for stablecoins. If signed into law, the bill would require tokens to be backed by liquid assets and for issuers to publicly disclose the composition of their reserves on a monthly basis.

The Senate passed the bill earlier this month, and the House of Representatives is poised to pass the legislation early this summer.

U.S. President Donald Trump is expected to sign the bill into law. He has sought to overhaul cryptocurrency regulation after courting cash from the industry during his presidential campaign.

Once signed into law, the bill could pave the way for more traditional financial institutions and retailers to incorporate stablecoins into their businesses, experts and analysts say. Circle is preparing for that eventuality, Allaire said.

"We're going from the early-adopter phase of this technology into the mainstream," said Allaire. "As a public company, and now, hopefully if we are successful in getting approval from the OCC as a national trust, that will give us a foundation that the world's leading institutions are going to be comfortable building on."

Wall Street brokerages began coverage of Circle on Monday with broadly bullish ratings, although some analysts voiced concerns about its elevated valuation given that the stock has more than doubled since its market debut.

Barclays, Bernstein, Canaccord Genuity and Needham launched coverage with the equivalent of "buy" ratings and price targets above $200, while JPMorgan and Goldman Sachs had more bearish outlooks.

Source: Reuters

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Manuel

Economic

Central Bank

The head of the European Central Bank said inflation has become more unpredictable due to shocks like the COVID-19 pandemic and Russia’s invasion of Ukraine - and that policymakers need to take the possibility of such extreme scenarios into account and communicate them to the public as well.

“The world is ahead is more uncertain, and that uncertainty is likely to make inflation more volatile,” ECB President Christine Lagarde said Monday in a speech opening the central bank's annual conference in Sintra, Portugal. “It's pretty basic but that's the reality.”

One reason, she said, was that increasingly regular supply disruptions were leading companies to change their prices more frequently, a habit that goes beyond the recent burst of inflation in the U.S. and Europe and “reflects a structural shift in how firms operate under conditions of permanently higher uncertainty."

The bank's assessment of the economy needs to rely on taking extreme possible scenarios into account as well as the more likely baseline predictions, and it should let the public in on those possible outcomes as well, she said. Lagarde in particular cited the inflation spike that followed Russia's inflation of Ukraine, where a baseline scenario based on higher energy prices suggest inflation for 2022 of 5.5% - but a worst-case scenario indicated more than 7% inflation, much closer to the final figure of 8%.

Another example was the pandemic, where spending by homebound consumers shifted from services like restaurants to goods such as home exercise equipment.

“Scenario analysis could have helped in illustrating that the range of possible inflation outcomes was unusually wide – and would have reduced the risk of projecting false certainty to the public,” Lagarde said.

The bank's strategy review announced Monday reaffirmed its target of 2% for inflation, a goal it has met for the time being as annual price increases were 1.9% in May. The drop in inflation has let the bank cut its benchmark interest rate from a peak of 4% to 2%.

Threats of higher tariffs from U.S. President Donald Trump have added to uncertainty about the outlook for growth and inflation. The European Commission and US negotiators are trying to reach agreement on a trade deal ahead of a July 9 deadline.

The conference in Sintra is the ECB's equivalent of the U.S. Federal Reserve gathering in Jackson Hole, Wyoming, and gathers top central bankers and economists from around the world. Fed Chair Jerome Powell is to take part in a panel on Tuesday with Lagarde, Bank of England Government Andrew Bailey, Bank of Korea Governor Chang Yong Rhee and Kazuo Ueda, the governor of the Bank of Japan.

Source: AP

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Manuel

Economic

Political

President Donald Trump threatened to impose a fresh tariff level on Japan, while his top economic adviser said the White House aims to finalize deals with partners after the July 4 holiday.

Trump’s latest round of brinkmanship with Tokyo on Monday comes just over a week before a July 9 deadline for higher tariffs to restart for dozens of trading partners, including Japan. He cited what he said was the country’s unwillingness to accept US rice exports.

“They won’t take our RICE, and yet they have a massive rice shortage,” Trump posted on social media. “In other words, we’ll just be sending them a letter, and we love having them as a Trading Partner for many years to come.”

Trump for weeks has sought to exert leverage with negotiating partners ahead of the deadline, vowing to cut short talks with those he sees as being difficult and instead send them letters setting tariff rates.

The president paused his country-by-country tariffs in April to allow time for negotiations. Since then, he and his team have repeatedly pledged that a slate of deals was weeks away. But to date, the only two agreements announced have been broad frameworks with China and the UK.

Meanwhile, White House National Economic Council Director Kevin Hassett signaled Monday that agreements with several governments would be announced after US Independence Day. He said the administration’s focus has been on passing Trump’s massive tax and spending bill through Congress before the holiday.

“It might be that people take an hour or two off on the Fourth to watch the fireworks and then we’ll get back, and we’re going to start to announce the frameworks,” Hassett said Monday on Fox Business. “We’re expecting to meet with the president and explain the frameworks that have been negotiated and see if he approves or not.”

Talks between the US and Japan are expected to continue despite Trump’s latest threat, according to Hassett.

“Nothing is over. I know what he just posted, but there’ll still be discussions right up to the end,” he told reporters.

Trump’s threats to cut off talks with nations have sometimes seen trading partners retreat on policies that drew his ire, leading to resumed negotiations. The president said Friday he was ending all trade talks with Canada in retaliation for its digital-services tax. But after Ottawa withdrew that tax, Hassett told reporters Monday there had been “lots of progress in our discussions with Canada.”

Japan is one of the most significant US trading partners, putting it in a category of economies that Trump administration officials has said are in line for deals — rather than imposed rates.

Commerce Secretary Howard Lutnick said last week that the administration would finalize a slate of trade deals with roughly 10 of the “top” US partners, while others would receive letters setting duty levels.

US and Japanese officials have yet to resolve thorny issues surrounding tariff levels and trade barriers in talks that have stretched on for months.

Japan has pressed for relief from Trump’s 25% auto tariffs, saying they are crippling a crucial industry. But the US president has balked at the request, saying Japan does not import a significant number of American-made vehicles. Japan is facing a separate 24% levy on all exports to the US, which was lowered to 10% during the negotiating period.

Earlier Monday, White House Press Secretary Karoline Leavitt said the US was nearing deals with India and other nations ahead of the deadline reimposing higher tariffs that were paused for 90 days in April in order to conduct talks.

“He is going to set the rate for many of these countries if they don’t come to the table to negotiate in good faith, and he is meeting with his trade team this week to do that,” Leavitt said.

Source: Bloomberg

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Forex

Economic

Given the sometimes contradictory statements made by the US president, it is sometimes difficult to get a clear picture of his economic policy objectives. To help clarify the situation, here is a quick summary. Donald Trump's economic vision is US-centric, focused on growth, industrial employment (through the the country's reindustrialization) and competitiveness.

To achieve this, he wants to pull several levers. First, he is campaigning for low interest rates of around 1%, in order to reduce the cost of debt servicing, hence supporting both credit, real estate, and consumption. Second, he wants to weaken the dollar to stimulate exports and support the competitiveness of US companies while rebalancing the trade balance. The imposition of massive tariffs on steel, automobiles, and many countries is intended to indirectly force a depreciation of the dollar. However, the US president's interference is not without risk and raises questions about the independence of the Fed and could also cause the dollar to lose its status as a safe haven.

All these factors largely explain the greenback's decline since the beginning of the year. The EUR/USD breaking above 1.1675 could further accentuate the trend, despite the persistence of bearish divergences on technical indicators. As stated in last week's column, we will therefore wait for the 50-day moving average, currently providing support around 1.1380, to be broken to confirm that the uptrend is losing momentum and offer the dollar a real boost. In the meantime, the short-term upside targets are 1.1918/28 before 1.2000/35. In the longer term, 1.2190 and then 1.2340 remain entirely possible, but each day will bring its own challenges. Tactically, however, it is advisable not to take positions during breakouts due to the presence of bearish divergences. Instead, we would favor buying on dips.

The USD/JPY played a nice trick on us with a direct return to 146.60/145.70 on the very day that this zone was exceeded. This false breakout effectively widens the range to 148.00/65 at the top and 142.00 at the bottom. The USD/CHF hit its intermediate resistance at 0.8225 and is on its way to 0.7900 for initial resistance at 0.8115.

On the commodity currency front, the Aussie successfully tested its key support at 0.6390, while the Kiwi reacted well at 0.5900 in parallel. As for the USD/CAD, it remains poorly oriented as long as 1.3805 is not exceeded.

source : marketscreener

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Economic

This is one of Donald Trump's many obsessions: low interest rates. He talks about it all day long. And the more time passes, the more he demands. A few weeks ago, he called for an immediate 100-basis-point cut. On the day of the Fed's last meeting on June 18 he suggested that he should perhaps appoint himself as head of the Fed and that rates should be "two points lower."

On Friday, he even called for rates to be cut to 1% (bearing in mind that key rates are currently in the 4.25-4.5% range). This is a call that Jerome Powell is not prepared to answer at this stage. "I would love for him to resign, he's done a terrible job," the US president said.

Phantom president

Why this obsession? First, because lower rates are more conducive to growth. And above all because the debt burden is very high. According to estimates by Torsten Slok, chief economist at Apollo Global Management, debt interest payments cost the US $3.3bn every day. And 18% of federal government revenue is spent on this item.

By Jerome Powell's own admission, interest rates are currently in restrictive territory (they are slowing down the economy). But with growth remaining solid and the risk of a return to inflation caused by tariffs, the Fed has every reason to remain on hold for the time being.

Hence Donald Trump's desire to appoint someone more favorable to rate cuts to head the Fed. Although he has repeatedly threatened to fire Jerome Powell, this idea now seems to have been ruled out, and the debate is focused on finding his successor. Jerome Powell's term expires in less than a year (May 2026), although he will remain on the Fed's board until January 2028.

However, the appointment of the next Fed chair could come quickly. Last week, the Wall Street Journal reported that the announcement could be made as early as September. This would create a "shadow Fed chair," who could begin guiding market expectations before taking office.

Don't play with independence

Donald Trump seems willing to do anything to get interest rates down. But does the US president's aggressive strategy really serve his cause?

The threats against Jerome Powell and the desire to appoint someone who will be loyal to him weaken both the credibility of the institution and the person he chooses.

Each attack by Donald Trump fuels doubts about the sacrosanct independence of the central bank. This independence is itself key to the effectiveness of monetary policy in the long term, and therefore to the fulfillment of the inflation mandate.

If the markets start to doubt the Fed's independence, the consequence will be... higher rates.

This is especially true given that every time a new Fed chair is appointed, the market always "tests" them. According to an analysis by Bank of America covering the last seven appointments (since Arthur Burns in 1970), rates tend to rise in the three months following the announcement. On average, 2-year rates rise by 65 basis points and 10-year rates by 49 basis points over this period.

Three months after Jerome Powell's appointment, the 2-year rate had risen by 15 basis points and the 10-year rate was up 7 basis points.

For the next Fed chair, the best way to lower rates will therefore be to distance themselves from President Trump and reaffirm the Fed's independence from political power.

The trajectory of interest rates will mainly depend on inflation in the coming months. Inflation is likely to rebound as the impact of tariffs is felt. Tariffs tend to be inflationary. Higher inflation means higher interest rates.

Finally, long-term rates are sensitive to concerns about the deficit. Congress is expected to pass Donald Trump's tax bill this week. According to estimates by the Congressional Budget Office (CBO), the version of the bill passed by the House last month would increase the deficit by $2.8 trillion over 10 years. And the version expected to be passed by the Senate is likely to cost even more.

In short, while Donald Trump spends all day calling for lower interest rates, his communication and actions could well produce the opposite result.

Source: marketscreener

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Forex

Sterling was on track for its biggest quarterly rise against the dollar in more than two years on Monday, aided by weakness in the dollar across the board and optimism over a trade deal between the United States and Britain.

The pound has been among the top beneficiaries of the "sell America" narrative that has dominated much of market sentiment over the past six months, as investors worry that U.S. President Donald Trump's erratic style of policymaking could trigger a U.S. recession that hurt global economies.

The British currency is on track for its strongest quarterly performance since October 2022, having gained about 6% against the U.S. dollar. It has appreciated more than 9% during the past six months.

On Monday, the pound see-sawed between marginal gains and losses and was last down 0.1% at $1.3705, having rallied over the past two weeks. Against the euro, the currency slipped, with the euro last up 0.2% at 85.59 pence.

Investors were also looking favourably upon British assets, as Britain was first among global economies to strike a trade deal with the United States.

An agreement to lower U.S. tariffs on some industrial items from Britain also came into effect on Monday.

"The UK was first out of the block in terms of getting a deal signed with the United States, although there is still going to be pockets of uncertainty to some sectors," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"Even so, it has again brought more stability in terms of the relationship that the UK has with the U.S... compared to the European Union, where there (are) still no agreements."

Meanwhile, data confirmed that the British economy grew at its fastest pace in a year in the first three months of 2025, though signs of softening consumer demand could potentially weigh on the economy in the months ahead.

Markets are pricing in the likelihood that the Bank of England could deliver 50 basis points worth of interest rate cuts by December, with the first expected in September, according to data compiled by LSEG.

Other British assets were also poised to finish the quarter on a strong note, with domestically-exposed FTSE 250 mid-cap stocks (.FTMC), opens new tab set for their best quarterly performance since October 2020.

Source: reuters

Risk Warnings and Disclaimers

Add to Favorites

Manuel

Central Bank

Political

It’s a widely held belief among economists that President Donald Trump’s tariffs will boost inflation notably over the next few months. But muted price increases so far have called that assumption into question, emboldening the White House and opening up divisions at the Federal Reserve.

Anticipation of firmer inflation has kept the US central bank from delivering interest-rate cuts this year as it waits to see what happens. The Trump administration is applying intense pressure on Fed Chair Jerome Powell to bring down borrowing costs, and two Fed governors in recent days have publicly diverged from Powell by asserting a cut could be appropriate as soon as July.

A pair of key reports in the coming weeks — the monthly jobs report due Thursday and another on consumer prices due July 15 — will be critical in determining the central bank’s next steps. Both are expected to finally begin reflecting the impact of tariffs, but any surprises could change the schedule for rate cuts.

“One of the things that makes it such a difficult situation is that we simply haven’t done this sort of experiment in the past,” William English, a professor at the Yale School of Management and former high-ranking Fed economist, said of the tariffs. “We’re outside the range of experience for a modern US economy, and so it’s very difficult to be confident about any forecast.”

Trump and his allies have escalated attacks on the Fed and Powell in recent weeks, motivated by data showing inflation remained tame through May despite the tariffs put in place. White House Press Secretary Karoline Leavitt told reporters Monday that Trump had sent a note to Powell calling for lower rates. Trump posted a copy of the note to social media, saying Powell and other Fed officials “have one of the easiest, yet most prestigious, jobs in America, and they have FAILED.”

Other Trump administration officials and some congressional Republicans — oftentimes more reticent to weigh in on monetary policy — have joined in as well. Kevin Hassett, director of the White House National Economic Council, said on June 23 that there is “no reason at all for the Fed not to cut rates right now.”

Hassett, who is seen as a possible replacement for Powell when the Fed chair’s term expires next year, emphasized data due in the coming weeks: “I would guess that if they see one more month of data, they’re going to really have to concede that they’ve got the rate way too high,” he said.

And Treasury Secretary Scott Bessent said Monday on Bloomberg TV that Fed officials “seem a little frozen at the wheel here” after having made “a gigantic mistake” letting inflation run too far in 2022.

The debate reflects the delicate situation the Fed is in as it aims to avoid a policy mistake. Should officials cut rates just as tariff-induced price pressures kick in, they may have to resort to more aggressive measures later on. But holding rates at an elevated level to combat inflation that never materializes risks restraining the economy unnecessarily, potentially damaging the labor market in the process.

Forecasters expect inflation to accelerate in the coming months. Powell told Congress in testimony last week he expects “meaningful” price increases to materialize in June, July and August data as the levies work their way through the economy. But he added Fed officials are “perfectly open to the idea” the impact could be smaller than feared, “and if so, that’ll matter for our policy.”

The Bureau of Labor Statistics will publish its report on consumer prices for June on July 15, two weeks before the central bank’s next policy meeting. Fed Governors Christopher Waller and Michelle Bowman — both Trump appointees — have broken step with Powell and their other colleagues to raise the possibility of a rate cut next month if the data cooperate.

“I think we’ve got room to bring it down, and then we can kind of see what happens with inflation,” Waller said in a June 20 CNBC interview, adding the central bank could always bring a halt to rate cuts again if necessary. “We’ve been on pause for six months to wait and see, and so far the data has been fine.”

Still, investors currently see only about a 20% chance of a July move and are instead betting the next cut will come in September, according to federal funds futures.

Tariff Math

Benign inflation readings through May suggest companies are finding ways, at least for now, to avoid price hikes despite Trump’s tariffs on dozens of US trading partners — and widespread uncertainty over how long the duties will last and the level where they’ll ultimately settle.

One potential explanation is companies are working through inventories of imports they frontloaded in the first quarter to get ahead of the levies, said Josh Hirt, a senior US economist at Vanguard Group.

Hirt’s calculations suggest that, on average, importers this year have paid an effective tariff rate lower than what Trump has put in place, largely because so much was brought in before they took effect.

Another source of uncertainty Powell discussed in his testimony is just how the costs of the tariffs will be split between exporters, importers, retailers, manufacturers and consumers.

“In the beginning, it will be the importer that pays the tariff, but ultimately it will be spread out among those five,” Powell said, adding that data suggests at least some of the impact will fall on consumers.

What Bloomberg Economics Says...

“After a brief lull in April and early May, container traffic from China to the US is rising again, with year-to-date import volumes on pace to exceed normal levels at least through summer. If that pace is sustained, US store shelves should be well-stocked at the holiday season. That likely means less need for firms to pass on tariff costs this year.” — Estelle Ou and Andrej Sokol, economists

Before the July 15 inflation report comes equally consequential monthly data on employment, due from the BLS on July 3. So far this year, there’s been little indication that tariffs have put a dent in hiring, which has allowed the Fed chair and many of his colleagues to maintain that a solid labor market means there’s no rush to cut rates.

But as with the inflation data, forecasters have largely maintained that any potential labor-market impact of the trade policy upheaval wouldn’t be visible before the release of the June figures. In a Bloomberg survey, economists said they expect the this week’s report will show the unemployment rate in June crept up to 4.3%, which would mark the highest level since 2021.

Bowman, in a June 23 speech, said Fed officials should “recognize that downside risks to our employment mandate could soon become more salient, given recent softness in spending and signs of fragility in the labor market.”

Monthly consumer spending figures published Friday by the Bureau of Economic Analysis showed a drop in outlays in May as households pulled back on discretionary services like travel and dining, and forecasters warned higher prices in the months ahead would put more pressure on consumption.

English, at Yale, said the impact of tariffs will depend on factors which are difficult to measure. But “the kind of intuition that there’s going to be some pass-through of the tariffs to prices just feels right,” he said. “I am not yet thinking that the basic story is wrong.”