Circle Places cirBTC Under Federal Bank Oversight
Circle’s trust bank must securely link the 1-to-1 backed ERC-20 token to native Bitcoin, with separate custody and Chainlink Proof of Reserve.
Key Takeaways
- Circle brought cirBTC under federal bank oversight through Circle National Trust, now First National Digital Currency Bank, N.A.
- cirBTC is an ERC-20 token backed 1-to-1 by native Bitcoin and remains redeemable for the underlying BTC.
- Chainlink’s Proof of Reserve and separate accounts are meant to make cirBTC’s reserves and custody more transparent.
Circle has brought its wrapped Bitcoin product cirBTC under federal bank oversight through Circle National Trust, the trust bank of stablecoin issuer Circle. The setup is meant to connect native Bitcoin to Ethereum DeFi, while the underlying coins stay in regulated custody and do not need to be sold first.
Federal Oversight of Custody
Circle National Trust received final approval on July 10, 2026 from the Office of the Comptroller of the Currency, the U.S. regulator that also oversees major banks. Since July 24, 2026, the bank has operated under the name First National Digital Currency Bank, N.A. and does not accept deposits or loans.
For cirBTC holders, this means their Bitcoin is not held by just any third party, but in separate accounts that are protected from bankruptcy. cirBTC is an ERC-20 token backed 1-to-1 by native Bitcoin and can also be redeemed for the underlying BTC on that basis.
That makes it possible to use Bitcoin in Ethereum-based DeFi protocols without selling the coins. Circle went through a process that took more than a year, with an application in June 2025, conditional approval in December 2025, and finally the green light in July 2026.
Transparency Around the Reserves
A key part of the setup is the reserve check through Chainlink’s Proof of Reserve system. That lets on-chain attestations show that the underlying Bitcoin is actually there, instead of relying only on periodic statements from an accountant.
That extra transparency matters because wrapped Bitcoin products have often sparked debate in the past over their custody structure. Circle is now putting forward a model with federal bank status, separate accounts, and a verifiable reserve setup. That fits into a broader trend where major players are also making bitcoin custody for institutional clients more mainstream.
Why This Matters for DeFi
For European crypto readers, this is especially interesting because it shows how far regulated custody can now be extended into DeFi products. Circle also already has a New York BitLicense and says it complies with the European MiCA rules as well, which further highlights the bridge between U.S. and European compliance.
The combination of bank oversight and on-chain reserve checks could be especially relevant for parties that want to use Bitcoin inside DeFi, but place more emphasis on transparency and counterparty risk. It also shows that regulated trust bank structures for bitcoin and stablecoins in the U.S. are becoming a more standard part of the market.
