BNY has launched services for minting, redeeming, holding, and transferring USDC on its Digital Asset Custody platform, providing institutional clients with direct access to Circle’s stablecoin through the bank.
Summary
- BNY enables institutional clients to mint, redeem, store, and transfer USDC directly within its Digital Asset Custody platform.
- The bank has expanded its partnership with Circle, moving beyond merely safeguarding USDC reserves to offering direct stablecoin services to clients.
- BNY joins leading financial institutions such as Invesco, JPMorgan, and State Street in introducing products related to stablecoin reserves and infrastructure.
BNY mentions that this enhancement allows clients to exchange U.S. dollars for USDC and convert the stablecoin back to dollars directly through the platform. Additionally, clients can securely store and transfer USDC using the digital asset custody service, making Circle’s token the first stablecoin to be supported by this platform.
This service bolsters BNY’s existing collaboration with Circle, as the bank not only serves as the main custodian for USDC reserves but also broadens its offerings to include direct stablecoin services for institutional clients.
BNY aims to support more stablecoins and digital cash processes in the future; however, the bank has not disclosed which assets it may incorporate next or provided an estimated timeline for these developments.
BNY is advancing USDC in institutional custody
BNY oversees $59.3 trillion in assets under custody and administration, catering to over 90% of Fortune 100 companies. Its support for USDC provides larger institutions with a regulated banking framework for stablecoin issuance and redemption.
According to DefiLlama, USDC is the second-largest stablecoin by market capitalization, with over $73.8 billion in circulation. Tether’s USDT remains the largest, with the total stablecoin market valued at around $313 billion.
This announcement aligns with BNY’s recent undertakings in digital asset custody. In May, the bank partnered with Abu Dhabi-based Finstreet and the ADI Foundation to develop institutional custody services for Bitcoin and Ether, with plans to include stablecoins and tokenized real-world assets in the future.
By incorporating USDC minting and redemption, BNY is aligning stablecoin operations with the custody and settlement frameworks already in place for institutional clients. While Circle primarily focuses on USDC issuance, BNY’s expanded services offer clients essential custody and transaction tools for the token.
Banks are developing products for stablecoin reserves
BNY’s initiative reflects a larger trend among major financial institutions in creating products associated with stablecoins, reserve assets, and tokenized cash management.
Recently, Invesco submitted a proposal to the U.S. Securities and Exchange Commission to establish a tokenized money market fund centered on stablecoin reserve management, aimed at investing in cash and short-term U.S. Treasury securities.
In May, JPMorgan also filed to launch a tokenized money market fund designed for stablecoin issuers, which would invest in U.S. Treasury bills and overnight repurchase agreements backing payment stablecoins.
Additionally, State Street unveiled a government money market fund for stablecoin issuers earlier this month, investing in U.S. government securities and repurchase agreements, with State Street Bank and Anchorage Digital among its initial investors.
Other financial institutions have also entered the stablecoin service space; for example, Fidelity Investments launched its USD-backed stablecoin, FIDD, after obtaining conditional approval to operate as a national trust bank.
These announcements collectively highlight how major banks and asset managers are innovating around reserve, custody, and payment components of stablecoins as institutional demand for digital cash infrastructure continues to rise.
