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Circle Partners with New York Community Bank for Custody and Solutions for the Underserved and Unbanked
by Jared Klee | June 30, 2022

The News: Circle announced a partnership with New York Community Bank to custody the dollar reserves that back the Circle USDC stablecoin and to collaborate on solutions for underserved and unbanked communities. An initial solution is focused on supporting Minority-owned Depository Institutions to also become custodians of USDC reserves. Read the announcement from Circle here.

Circle Partners with New York Community Bank for Custody and Solutions for the Underserved and Unbanked

Analyst Take: Community banks are part of the lifeblood of the United States. They have deep, intimate knowledge of local markets and make capital available to millions of individuals and businesses across the U.S. who, for myriad reasons, often find themselves unable to borrow —the underserved and underbanked. With 225 branches, New York Community Bank (NYCB) is closer to a superregional than a strict community bank, but nonetheless plays the role of a community bank in New York, New Jersey, Ohio, Florida, and Arizona.

A partnership with Circle will help make USDC broadly available to those communities.

The partnership is part of Circle Impact, an initiative announced in November 2021 to make payments and money more inclusive. By starting with New York Community Bank and extending USDC to minority-owned Depository Institutions, Circle Impact is beginning to make part of that vision a reality.

A Circle New York Community Bank Partnership May Have Bigger Implications for the USDF Consortium

A Circle New York Community Bank partnership may have bigger implications for the USDF consortium, a bank-backed stablecoin network. New York Community Bank is one of the founding members of USDF alongside four community banks and the community bank group JAM FINTOP.

When you consider full reach of USDF, it’s impressive. The founding group collectively includes over 80 community banks that collectively account for more than $1 trillion in assets. While the technical designs of USDF and Circle’s USDC differ today, there’s a clear strategic alignment to bring stablecoins to community banks.

I’m hopeful the strategy succeeds. The number of banks in the U.S. has declined by more than two-thirds in the past thirty years, converting many local communities into banking deserts. More often than not, it’s exactly the people that can least afford to be cut off that are now struggling for basic services.

Local community banks need innovative services and partners to thrive. Circle is well positioned to be one of those partners and is taking the initiative to make it happen. I’m looking forward to seeing this play out.

Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.

Other insights from Futurum Research:

Circle Provides Industry-First Weekly USDC Stablecoin Transparency

USDC Stablecoin Issuer Circle Raises $400 Million from BlackRock and Fidelity

Red Hat Announces Red Hat Application Foundations, Designed to Deliver Enhanced Cloud Capabilities for Streamlined Application Development and Delivery in the Cloud

 

About the Author

Jared is an Analyst in Residence at Futurum Research, where he helps guide our practice in all things Web3, the Metaverse, and cryptocurrencies so as to help business leaders understand how they work, why they matter, and how they can not only get involved, but become market leaders along the way.

Jared previously co-founded and served as President and Board Member of Triple Point Liquidity, a blockchain-based fintech startup serving alternative asset managers, their investors, and fund administrators. Prior to Triple Point, he held multiple roles at IBM including leading Digital Assets at IBM Blockchain, leading corporate development for Industry Platforms, and founding Watson Risk & Compliance.

Jared is author and podcast co-host at Fat Tailed Thoughts and serves as a trustee for The Williams School.

Jared holds an AB from Dartmouth College.