BNY Mellon now offers custody service for Circle’s USD Coin
Boston-based stablecoin issuer Circle has selected BNY Mellon, which oversees about $47 trillion in assets, as a primary custodian for reserves of its USD Coin.
America’s oldest bank has set up a new unit dedicated to providing its clients with ‘an integrated service’ for digital assets. Upon launch, BNY customers were able to store Bitcoin and Ether in its crypto wallets which are powered by Fireblocks technology. The new offering targets native crypto firms, like Coinbase and other US exchanges, who are looking for BNY Mellon’s core investment services.
Citing growing client demand, maturity of blockchain and better regulatory clarity, the custodian bank states that even conservative clients are seeking exposure to digital assets.
Circle has been expanding the reach of the offering that is primarily focused on retail trading and investing to appeal for B2B partnerships. Currently, the crypto unicorn puts greater emphasis on its USD Coin (USDC), a stablecoin pegged to the US dollar. Furthermore, Circle also opens the doors of its stablecoin to businesses with a dedicated account that provides a toolbox of APIs to allow developers to build on top of USDC.
Acting as a sort of safe haven where crypto traders can park their assets in volatile markets, USDC is an Ethereum-based ERC-20 coin, which makes it easy for wallets, exchanges and other smart contracts to interact with the token.
With nearly $50 billion worth of tokens in circulation, USDC continues its remarkable trajectory, growing 10x over the course of 2021. Currently available on 8 blockchains, the coin has its ecosystem already integrated into more than 200 exchanges, platforms, wallets, and service providers.
BNY ventured into the crypto space in 2019
“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. Together, we will leverage our respective areas of expertise to innovate and build the financial ecosystem of the future,” said Jeremy Allaire, Co-Founder and CEO at Circle.
“Our role as a custodian for USDC reserves supports the broader marketplace and brings value to clients, founded on our role at the intersection of trust and innovation,” added Roman Regelman, CEO of Asset Servicing and Head of Digital at BNY Mellon.
BNY Mellon is developing a prototype that will eventually allow cryptocurrencies to pass through the same financial network it currently uses for investments in traditional assets like bonds and stocks. The bank ventured into the crypto space earlier in 2019 when it partnered with Bakkt, which created the first federally regulated cryptocurrency marketplace, to offer geographically-distributed storage of private keys secured by the bank.
Consequently, BNY and Bakkt have set up a crypto-custody service, under which the Wall Street bank’s history of safeguarding the assets of institutional clients is leveraged to store Bakkt’s digital assets.
Interestingly though, BNY Mellon was accused of playing a central role in the OneCoin cryptocurrency scam. FinCEN files showed the bank processed funds worth a total of $137 million for companies and people associated with the $4 billion Ponzi scheme.