Circle selects New York Community Bank as its final custodian for USDC reserves
Circle 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 United States, trying to make payments more inclusive for underserved communities.
- Under the new agreement, New York Community Bancorp’s banking subsidiary, New York Community Bank, will become a custodian of USDC reserves.
- Both 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 release.
- The news came months after the stablecoin issuer announced Wall Street giant BNY Mellon as its primary custodian for USDC. The two sides worked on building bridges between traditional and digital capital markets and “exploring digital money for settlement purposes.”
- Compared to BNY Mellon which holds approximately $45 trillion in assets on deposit, New York Community Bank is a relatively small bank, having only $61.0 billion in assets as of March 31, 2022.
- The plan represents Circle’s commitment to its long-term goal of allocating a portion of its reserve to Minority-Owned Depository Institutions (MDIs), with the goal “of reaching billions of dollars in deposits over time.” time across the footprint of underrepresented financial institutions”.
- Dante Disparte, chief strategy officer and head of global policy at Circle, saw the partnership as a crucial step in expanding the company’s ties to the community level.
“By partnering with NYCB, we are opening new avenues for community banks and MDIs across the country to become key players in the growing digital asset market.
- Circle’s USDC saw an increase in net inflows amid extreme volatility dominating the crypto market. Holding only cash and short-term US government bonds as assets backing its 1:1 peg to the US dollar, a relatively conservative strategy that prioritizes stability and compliance with regulators, USDC – behind only the largest stablecoin USDT – is the fourth-largest cryptocurrency with a market capitalization of nearly $56 billion.
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