Today Circle, the issuer of the USDC stablecoin, announced a custody partnership with New York Community Bank (NYCB). Back in March, Circle announced that BNY Mellon is the primary custodian for the USDC reserves that back the stablecoin.
In addition to the custody relationship, the NYCB plans to collaborate to enable Circle’s stablecoin solutions to target underserved and unbanked communities. An initial step is to support Minority-owned Depository Institutions (MDI) to become custodians of the USDC reserves. This is part of the Circle Impact initiative.
“If we want to make the future of money and payments more inclusive than the past, we have to build new partnerships and connections at the community level,” said Dante Disparte, Chief Strategy Officer and Head of Global Policy for Circle. “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.”
NYCB is no stranger to blockchain and stablecoin initiatives. It’s an investor in Figure Technologies, which developed the Provenance blockchain. The two organizations launched the USDF Consortium, along with community bank group JAM FINTOP and four other community banks. The USDF Consortium is a bank-backed stablecoin network for coins that are interoperable between FDIC-insured banks. Strictly speaking, USDFs are tokenized bank deposits that are different from typical stablecoins. Nine banks are now part of the USDF Consortium.
The other major bank-backed token network in the United States is TassatPay.
Meanwhile, Circle is about to launch a Euro stablecoin EUROC from the United States rather than a European jurisdiction. It recently transferred a major part of its funding to its Irish subsidiary. Circle has not elaborated on its reasons for launching from the United States. The current iteration of Europe’s crypto-asset regulations, MiCA, limits the ability to earn interest on the stablecoin, which is a key part of Circle’s business model. The legal requirements are also more demanding in Europe. MiCA legislation will likely come into force in early 2024, and at that point, EUROC won’t be usable through European institutions. But 18 months is a lifetime in the blockchain world.
