New York Community Bank to Hold Assets Backing Circle's USDC
This marks the first time a community bank will serve as a custodian for a stablecoin.
New York Community Bank, a New York state-based community bank that also has branches in New Jersey, Florida and Ohio, will serve as a custodian for some of the reserve assets behind the USD coin (USDC) stablecoin, Circle, USDC's issuer, said Tuesday.
The two companies will also work on "low-cost financial solutions for underserved and unbanked communities," according to a statement.
The partnership is part of Circle's push to include underrepresented financial institutions in the digital asset market and allocate a share of its reserves in minority-owned depository institutions.
USDC has distinguished itself from stablecoin competitors by forging closer ties with traditional banks and reportedly being more conservative in the selection of reserves, holding only U.S. dollar-denominated cash and short-term U.S. government bonds. It's the second-largest stablecoin after Tether's USDT with a circulating supply of $55 billion. It has taken market share from USDT since the implosion of the Terra blockchain.
Earlier this spring, Circle announced that BNY Mellon, one of the oldest and largest custodian banks in the U.S., would be the primary custodian for USDC reserves.
NYCB is a relatively small bank, managing $61 billion in assets, according to its website. By comparison, BNY Mellon's assets under custody amounts to $45 trillion.
In the long term, though, Circle says it aims to move "billions of dollars in deposits over time" to underrepresented financial institutions.
“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," Dante Disparte, Circle's chief strategy officer and head of global policy, said in the statement, referring to minority depositary institutions.
Read more: How Does USDC Work?
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.