By
Bhushan Akolkar
April 16th, 2024
Circle says BNY Mellon will be its official primary custodian for USDC reserves which would be held in cash and treasuries.
USDC operator Circle recently announced that leading financial institution Bank of New York Mellon Corporation (BNY) will custody its USDC reserves.
Circle CEO Remarks on Latest USDC Reserves Initiative with BNY
Circle co-founder and CEO Jeremy Allaire spoke on the collaboration with BNY Mellon. Allaire suggested that BNY’s value proposition resonates with Circle’s mission statement of “building trust, stability and resilience in the digital asset economy”. Furthermore, the Circle chief remarked on the unique strengths posed by his company and BNY. According to him, it is a prime opportunity to blend traditional financial services with the growing digital assets markets. In his own words:
“As we continue to see exponential growth in USDC, the opportunity to work with BNY Mellon is one way we build bridges between traditional financial services and emerging digital asset markets without sacrificing trust.”
BNY Looks to Leverage Its Existing Working Relationship with Circle into Other Digital Asset Initiatives
Meanwhile, Roman Regelman, CEO of asset servicing and head of digital at BNY Mellon, expressed the need for evolution. He first started out by acknowledging the giant strides made by the digital assets industry, saying:
“We are at a point in the evolution of our industry where the digitization of assets presents new and exciting opportunities to a broad range of market participants.”
Furthermore, Regelman pointed out how integral BNY’s role is from a micro and macro perspective in the financial landscape. According to the high-ranking executive at one of America’s oldest banks, “as a custodian for USDC reserves, our role supports the broader marketplace and brings value to clients, founded on our role at the intersection of trust and innovation.”
BNY also stated that it will look into the possibility of using digital cash for settlement purposes. Furthermore, the Circle initiative marks another important step towards embracing blockchain technology for the New York-headquartered investment bank. Back in 2015, BNY Mellon invested in R3, a leading software company, and later joined its Marco Polo Network. This network comprises a consortium of leading financial institutions looking to use blockchain for international transactions.
USDC Reserves’ Explosion in Popularity Sees Regulatory Call for Increased Backing Using Government-Protected Assets
In addition to a company valuation surge, Circle’s USDC stablecoin market cap has also surged 60% to $51 billion. As the USDC becomes one of the world’s fastest-growing dollar stablecoins, Circle and other issuers are under increasing regulatory pressure. US lawmakers want firms like Circle and Tether to back their tokens with assets like cash or Treasury Bills. According to these lawmakers, this is necessary to further ensure tokens against problems peculiar to the crypto industry. According to a Cointelegraph report, the total supply of stablecoins hit $180 billion in February.
However, Tether released a new assurance report back in February, which showed a 21% decrease in commercial paper reserves over the last quarter. Tether’s USDT is currently the third-largest crypto after Bitcoin (BTC) and Ethereum (ETH), thanks to its $81.9 billion market cap.