What happened: Circle (CRLC) stock surged 13% in premarket trading on Friday

What’s behind the move: Circle said it received regulatory approval to establish its own national trust bank, reducing its reliance on outside banks.

The US Office of the Comptroller of the Currency (OCC) has authorized the stablecoin issuer to directly manage its reserve assets and provide digital asset custody services for institutional clients.

The new entity, Circle National Trust, will operate under direct federal banking oversight.

“OCC approval to ‌establish Circle National ⁠Trust marks a defining step in bringing blockchain technology and digital assets into the core ⁠of the U.S. financial system,” Circle CEO Jeremy Allaire said in a statement.

What else you need to know: Until now, the cash and short-term US Treasurys backing Circle’s flagship stablecoin, USDC (USDC-USD), have been held by third-party banking partners.

With its new trust bank charter, Circle will be able to eventually hold those multibillion-dollar reserves under its own federally regulated custody.

The approval also removes a key regulatory hurdle, making it easier for banks, asset managers, and other institutional investors to use Circle’s infrastructure for digital asset custody and blockchain-based payments.

Ines Ferre is a Senior Business Reporter for Yahoo Finance covering the US stock market, publicly traded companies, and commodities.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

Read the latest financial and business news from Yahoo Finance