Circle Taps New York Community Bank as its Latest Custodian for USDC Reserves
Circle has tapped a New York state-based community bank as its latest custodial provider for USDC reserves. The move reflects Circle’s strategy to deepen partnerships with Community Banks across the U.S., attempting to make payments more inclusive to underserved communities.
- Under the new agreement, New York Community Bancorp’s bank subsidiary, New York Community Bank, will become a custodian for USDC reserves.
- The two companies will leverage their strengths in their respective fields to promote access to “low-cost financial solutions for underserved and unbanked communities,” according to Circle’s official statement.
- The news came months after the stablecoin issuer announced the Wall Street giant BNY Mellon as its primary custodian for USDC. The two parties worked on building bridges between legacy and digital capital markets and “the exploration of digital cash for purposes of settlement.”
- In comparison to BNY Mellon holding roughly $45 trillion worth of assets in custody, New York Community Bank is a relatively small bank, only having assets of $61.0 billion by March 31st, 2022.
- The plan represents Circle’s commitment to its long-term goal of allocating a share of its reserve to Minority-owned Depository Institutions (MDIs), in a bid to “reach billions of dollars in deposits over time across the footprint of underrepresented financial institutions.”
- Dante Disparte, Chief Strategy Officer and Head of Global Policy at Circle, viewed the partnership as a critical step in extending the firm’s connections to the community’s level.
“By partnering with NYCB, we are opening up new pathways for community banks and MDIs across the country to be key participants in the fast growing digital assets market.
- Circle’s USDC witnessed an increase in net inflows amid extreme volatility dominating the crypto market. Holding only cash and short-term U.S. government bonds as the assets backing its 1:1 peg to the U.S. dollar, a relatively conservative strategy that prioritizes stability and compliance to regulators, USDC – trailing only to the largest stablecoin USDT – is the fourth-largest cryptocurrency with a market cap of nearly $56 billion.
