Is Coinbase About To Look Wildly Overvalued?

Whispers across trading floors are getting louder. Circle is not just another crypto company angling for better optics. With the OCC greenlighting its national trust bank charter, Circle is stepping over an invisible regulatory line and into the club that actually matters: federally supervised banking. That shift changes what Circle is, what USDC is, and who ultimately controls the plumbing of a big chunk of the crypto dollar system. A firm that used to be lumped in with exchanges and fintechs is now repositioning as a federally regulated trust bank with explicit authority to custody digital assets under the same regulator that watches national banks. In a market that trades on perceived safety and regulatory clarity, that is not a cosmetic upgrade. It is a new tier of legitimacy.

Until now the U.S. crypto landscape has been dominated by platforms like Coinbase, Gemini and Kraken that stitch together state money transmitter licenses, BitLicenses and bespoke state charters to create a patchwork of compliance. Those regimes let them move fiat and crypto, hold customer funds and operate exchanges, but they sit outside the full federal banking stack. They do not have direct access to Federal Reserve payment rails, and they rely on partner banks for core banking functions. Circle’s national trust bank charter cuts through that maze. It places Circle directly under OCC supervision, lets it operate nationally without state by state approvals and formally positions it as a bank level custodian for digital assets and USDC reserves.

Now layer in the size of the machine Circle is plugging into the banking system. USDC’s circulating supply has climbed into the mid $70B range, giving it roughly a quarter of the global stablecoin market and a rising share of on chain dollar liquidity. That is not just some DeFi side pot. Stablecoins are now measured as a visible slice of U.S. M2 and are increasingly referenced alongside payment networks and money market funds. Giving the issuer of a $74B token direct federal oversight and, over time, access to Fed level infrastructure and lending options turns USDC from “crypto dollar” into something much closer to a parallel deposit system wrapped in token form. The prospect of Circle ultimately being able to place reserves, tap liquidity and interact more directly with the Fed makes USDC look a lot less like a tech product and a lot more like a regulated dollar instrument.

That is where the Coinbase comparison starts to bite. Coinbase trades around a $60B market cap, and a meaningful chunk of its narrative rests on its custody franchise and institutional trust story. It safekeeps assets for funds, corporates and high net worth clients, and it earns high margin fees for doing exactly that. The catch is that Coinbase does all of this without bank powers. It holds a constellation of state licenses, it partners with banks for fiat, and it operates under a capital markets and money services regulatory umbrella. Circle is now positioned to run a very similar core custody and reserve management business, but inside a federal banking framework that is structurally more attractive to the most conservative institutions.

From an insider perspective, the trade idea that is starting to form is simple. If the market continues to value Coinbase as the premier “regulated on ramp” at $60B while Circle controls a $74B token float under a federal trust charter, the spread between how those business models are priced begins to look misaligned. A bank charter is not a guarantee of success and it comes with heavy compliance and capital costs. But for asset managers, corporates and global banks that have been waiting on the sidelines for a signal that stablecoin infrastructure is moving inside the perimeter, Circle just sent that signal. Over the next cycle, mandates that once reflexively defaulted to Coinbase custody could start to tilt toward a federally supervised USDC bank.

The deeper implication is that this is not a story about one company winning and another losing. It is about a structural rewiring of crypto’s core plumbing. A federally chartered Circle holding USDC reserves and offering bank grade custody while exchanges remain in state licensed territory sets up a clean institutional split between “token issuer bank” and “market venue.” In traditional finance that split is where large, boring, systemically important profits quietly accumulate. Traders who live in basis points have started to notice that a $74B stablecoin with banking powers attached may be underappreciated relative to a $60B exchange that still depends on partner banks for access to the same rails. The charter is more than a headline. It is the market’s first serious test of whether crypto’s future leaders will look more like banks than brokerages.

Originally published at https://coinbasecorridor.blogspot.com on December 17, 2025.

Is Coinbase About To Look Wildly Overvalued? was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.