Circle Internet Financial, which is the issuer of the USD Coin (USDC) stablecoin, yesterday announced a partnership with New York Community Bancorp, Inc. (NYSE: NYCB) to have the group’s subsidiary bank, New York Community Bank, as the custodian of USD reserves pegged to USDC.
USDC: New York Community Bank provides more transparency to Circle’s stablecoin
USDC is a stablecoin pegged to the US dollar, so every USDC issued by Circle must be matched by $1 in the reserves held by the company so that all users, at all times, can exchange their cryptocurrencies without fear that the collateral will not be there.
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In addition, the two companies will work together to use Circle’s stablecoin and blockchain to have low-cost solutions for the so-called unbanked, i.e., those populations that do not have access to financial institutions and, for example, do not even own a bank account.
Dante Disparte, Chief Strategy Officer and Head of Global Policy at Circle, explained:
“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. 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”.
It is important to note that New York Community Bank is the first bank with which Circle is forming a partnership and therefore the only one that will be a custodian of USDC’s reserves.
Andrew Kaplan, Executive Vice President and Chief Digital Bank and Banking of New York Community Bancorp, Inc. said:
“NYCB is proud to be a leading digital asset innovator among U.S. banks. We are thrilled that together with being a custodian for USDC reserves, we are also able to partner with Circle on meaningful initiatives to impact inclusion and education to our communities and customers. We look forward to working closely with Circle on this strategy and further enhancing our relationship”.
The benefits of this new partnership for USDC’s credibility
This partnership is obviously aimed at increasing transparency of the reserves, especially at a time when Tether is acquiring more and more volume and expanding on different blockchains, and following market uncertainties also due to the collapse of the Terra and Luna ecosystem and their UST stablecoin.
Who knows if this new move by USDC succeeds in raising the volumes of the stablecoin, which has always been popularly declared as more reliable than its competitors, but in reality still does not get to establish itself as the market leader.
At present, however, the gap between Tether (USDT) and USDC is not at its highest. At the time of writing, USDT is in third place by market cap with $66 billion, while USDC is behind by $11 billion with $55 billion in capitalization.
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