Stablecoin issuer Circle Internet Group, Inc. (CRCL) received a limited purpose trust charter from the New York Department of Financial Services (NYDFS) on Friday, its second trust charter in three weeks and the final piece of a structure that separates where USDC is issued from where its reserves are held and managed.
Circle Splits USDC Between Two Charters with New York Approval
31 July 2026 - 17:20 UTC
By Matt Neill
The charter was granted to Circle Internet Trust Company LLC, which will operate as Circle New York Trust. A New York limited purpose trust can provide fiduciary, custody and asset-management services under state banking law, powers Circle's existing BitLicense, the first ever issued by NYDFS in 2015, does not carry.
Taken together, the two charters are Circle's answer to a market that is turning against standalone stablecoin issuers from both sides. Banks and consortia are entering with distribution Circle cannot match, and the GENIUS Act has turned regulatory status from a compliance cost into the product itself. Circle's bet is that becoming the most heavily supervised issuer in the market, with a federal charter for custody, a state charter carrying issuer-grade fiduciary powers and its reserves ultimately inside its own regulated walls, makes USDC the default choice for institutions that must justify their counterparty to a regulator, and the hardest incumbent to displace for rivals whose pitch is a revenue share.
Two charters, two jobs
The state charter follows the Office of the Comptroller of the Currency's (OCC) final approval of Circle National Trust on 10 Jul. The two entities are built for different work. A New York limited purpose trust is the charter type through which Paxos and Gemini already issue their stablecoins, making it the natural home for issuance within Circle's structure, while the federal trust's approved plan covers custody. Circle has not said which USDC functions will sit in which entity.
The federal side comes with a published strategy. Under the business plan approved by the OCC, Circle National Trust opens by providing digital asset custody for Circle and its affiliates, may later extend custody to a limited number of banks and other financial institutions, and is designed to eventually bring management of the USDC reserve in-house under federal supervision.
That last step is the strategic one. As of 31 Dec 2025, about 88% of USDC reserves sat in the Circle Reserve Fund, with BNY as custodian and BlackRock as manager. Moving reserve management inside Circle's own federally supervised trust would reduce that dependence on outside banks, the exposure that mattered in March 2023, when USDC briefly lost its peg over reserves stranded at Silicon Valley Bank. Contacted by Sandmark on whether, and when, reserve functions would move to the new entities, Circle declined to comment beyond its press release.
Defending the moat
The two-charter structure also maps onto the GENIUS Act, which lets stablecoin issuers operate under federal oversight or a qualifying state regime. NYDFS is the most established of the state regimes, having chartered Gemini, Coinbase Custody, BitGo, Fireblocks, PayPal Digital, NYDIG and WisdomTree as limited purpose trusts. Paxos went the other way in December 2025, converting its NYDFS charter into a national trust bank.
The build-out comes as Circle's position faces its most organized challenge yet. Open USD, the consortium stablecoin backed by more than 140 companies including Visa, Mastercard and Coinbase, plans to share reserve income with participating businesses, a structure aimed squarely at USDC's distribution model. Against competitors offering payment for adoption, Circle's answer is regulatory depth that a consortium cannot quickly replicate.
The New York charter's fiduciary and asset-management powers also sit next to a growing tokenized-asset business: Circle's USYC, the tokenized money market fund it acquired with Hashnote in January 2025, held around $3bn in assets as of mid-2026, the largest tokenized Treasury product onchain. Circle has not said whether the new trust will serve that business.
Circle shares fell as much as 8.3% on Friday, touching $58.95 at around 15:30UTC, their lowest level since mid-February, before recovering to around $61.10 by 17:10UTC, according to TradingView. The slide came despite the charter announcement, with second-quarter results due on 5 Aug.
