Circle Taps BNY Mellon to Serve as Custodian for USDC Stablecoin Reserves

The Bank of New York Mellon Corporation, popularly known as BNY Mellon, has been selected to serve as the “primary custodian” for the reserve assets behind the USDC stablecoin, a cryptocurrency whose value is directly pegged to the U.S. dollar. Circle, a global crypto finance company, announced in a statement on Thursday.

The new partnership will assist in linking the traditional capital market with the digital asset market, Circle stated.

According to the report, both parties will collaborate to facilitate an exchange of expertise on issues regarding digital and traditional markets. Such issues include bridging traditional and digital capital markets, cash management for fiat and non-fiat payments, safekeeping of digital assets, investment management, and the exploration of digital cash for settlement purposes.

Roman Regelman, the Asset Servicing CEO and Head of Digital at BNY Mellon, talked about the development and said: “Our role as custodian of USDC reserves supports the broader market and provides value to clients, based on our role at the intersection of trust and innovation.”

Meanwhile, Jeremy Allaire, the co-Founder, Chairman and CEO of Circle, also commented on the new collaboration and stated that the partnership with BNY will enable their firm to “build bridges between traditional financial services and emerging digital asset markets, without sacrificing trust.”

By selecting the biggest custodian bank, Circle gets credibility, builds trust in its stablecoin brand, and positions its flagship product as a quality stablecoin. Likewise, partnership with the USDC stablecoin also gives BNY bank significant credibility and bolsters its brand among crypto clients.

Mellon bank is the world’s largest conventional custodian, with over $46 trillion in assets under custody. USDC is the second-largest stablecoin with almost a $52 billion market cap.

Expanding Access to Digital Assets to Institutions

In February, BNY Mellon announced developing a digital asset custody platform to allow institutional customers to gain crypto exposure. With the creation of the digital asset custody platform, the bank aims to enable institutions to store cryptocurrencies in BNY Mellon crypto wallets.

Mellon stated that the new digital asset custody service would gradually increase and integrate a variety of tokenized traditional and digital assets.

The new service has made the bank become the first to enter the global digital custody market, with intentions to expand worldwide based on demand, beginning with the U.S.

In the U.S., Mellon bank is the oldest banking organization founded at the end of the 18th century and is still running its business to date.

In early 2021, Mellon first entered into the crypto space when it announced its plans to begin financing Bitcoin and other digital currencies to its institutional clients, citing increased demand. Since then, the bank has expanded its crypto-related activities. In July last year, Grayscale Investments selected BNY Mellon as an asset servicing provider for Grayscale Bitcoin Trust.

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Turkey may establish central custodian bank following alleged fraud at two major exchanges

Following the arrests of several employees at Turkey-based crypto exchanges Thodex and Vebitcoin last week, government officials are reportedly planning to establish a central bank authority which could custody digital assets. 

According to a Bloomberg report, an unnamed senior official in the Turkish government said local authorities may be creating a central custodian bank aimed at eliminating counterparty risk for dealing in cryptocurrencies. The same source claimed that the government was also looking at instituting a capital threshold for exchanges and requiring executives at crypto firms to have a certain foundational knowledge of digital currencies.

The report comes as Thodex owner Faruk Fatih Özer is rumored to have fled to Albania following allegations of an exit scam which may have defrauded more than 390,000 users of the crypto exchange out of roughly $2 billion. Police detained 62 people connected to Thodex as the exchange said it would halt trading and withdrawals, while an international arrest order has been issued for Özer. Today, Albanian police raided a house in Tirana and detained two people who allegedly provided aid to Özer, but were unable to find the crypto exchange owner.

The state-run news agency Anadolu also announced employees from crypto exchange Vebitcoin were being held by authorities under similar allegations of fraud, later reporting that CEO Ilker Bas was among the four detained. Though Vebitcoin said on its website it would cease operations, Turkey’s Financial Crimes Investigation Board has reportedly already blocked Vebitcoin’s accounts and opened an investigation into the alleged fraud.

The arrests and restrictions from exchanges come after Turkey’s recently appointed central bank governor Şahap Kavcıoğlu effectively said he would ban cryptocurrencies in the country, a decree set to go into effect starting Friday. The order would reportedly prohibit holders from using their crypto for payments and will also prevent payment providers from providing fiat onramps for crypto exchanges.