BNY Mellon

USDC bounces back toward $1 peg after Fed announcement

Positive developments concerning Circle’s $3.3 billion worth of reserves held at Silicon Valley Bank and its new banking partners have seen USDC climb back toward its $1 peg.

Circle’s stablecoin USD Coin (USDC) is climbing back to its $1 peg following confirmation from CEO Jeremy Allaire that its reserves are safe and the firm has new banking partners lined up at “banking open tomorrow morning.”

According to CoinGecko data, USDC is up 3.3% over the past 24 hours to sit at $0.99 at the time of writing.

The price dropped to as low as $0.87 over the weekend amid concerns about $3.3 billion worth of USDC reserves being held at Silicon Valley Bank, which was shut down by the California Department of Financial Protection and Innovation on March 10.

Circle also has an undisclosed amount of reserves stuck at the recently bankrupted Silvergate.

In a March 12 Twitter thread, Allaire praised the U.S. government and Federal Reserve for its $25 billion funding program to support liquidity-troubled banks such as SVB:

“100% of USDC reserves are also safe and secure, and we will complete our transfer for remaining SVB cash to BNY Mellon. As previously shared, liquidity operations for USDC will resume at banking open tomorrow morning.”

Update thread on USDC

We were heartened to see the US government and financial regulators take crucial steps to mitigate risks extending from the fractional banking system.

100% of deposits from SVB are secure and will be available at banking open tomorrow.

— Jeremy Allaire (@jerallaire) March 12, 2023

Allaire added that following the implosion of crypto-friendly Signature Bank on March 12, Circle is no longer able to process USDC minting and redemption through SigNet and that the firm will be temporarily “relying on settlements through BNY Mellon.”

The CEO outlined that things will move quickly in this regard however, as he revealed that Circle “bringing on a new transaction banking partner with automated minting and redemption potentially as soon as tomorrow.”

The statement from Allaire and the Federal Reserve announcements has been followed by a significant pump for asset prices across the board, with the total crypto market cap now above $1 trillion following its sharp drop to $961 billion on March 11.

Despite the turbulence we have seen in the traditional banking sector recently, Coinbase continues to operate as usual. At Coinbase all client funds continue to be safe and accessible including USDC conversions which will resume on Monday.

— Coinbase (@coinbase) March 12, 2023

Assets such as Bitcoin (BTC), Ether (ETH), Cardano (ADA), Polygon (MATIC) and Solana (SOL) have pumped a hefty 10.6%, 11.4%, 12.3%, 11.7% and 15.1% in the past 24 hours alone.

Notably this is despite Signature Bank collapsing.

Signature was seen as the last crypto-friendly bank standing in the U.S. following the closure of Silvergate and SVB, and it is now unclear what the major banking on- and off-ramps into crypto are.

Crypto Biz: $43T bank enters crypto — Probably nothing, right?

Another major financial institution has signaled its intent to offer Bitcoin and Ether services to its clients.

As crypto traders debate whether Bitcoin (BTC) is going to $25,000 or $15,000 first, the world’s largest financial institutions are laying the groundwork for mass adoption. The proverbial floodgates are unlikely to open before the United States provides a clear regulatory framework for crypto, but regulators and industry insiders are confident that guidance could come in 2023 at the earliest. In the meantime, megabanks like BNY Mellon, whose roots date back to 1784, are entering the space.

This week’s Crypto Biz chronicles BNY Mellon’s foray into digital assets, JPMorgan’s ongoing experimentation with blockchain technology and Crypto.com’s new European headquarters.

BNY Mellon, America’s oldest bank, launches crypto services

Arguably the biggest story of the week was news of another established financial institution entering the crypto sphere. BNY Mellon, whose predecessor was founded 238 years ago, announced the launch of a digital custody platform to safeguard clients’ Bitcoin and Ether (ETH) holdings. Initially, the platform will serve select U.S. institutional clients. “With Digital Asset Custody, we continue our journey of trust and innovation into the evolving digital assets space while embracing leading technology and collaborating with fintechs,” said Roman Regelman, the bank’s CEO of securities services and digital. To get a sense of just how massive BNY Mellon is, the bank holds $43 trillion in assets under management as of 2022.

SWIFT action: JPMorgan and Visa team up on cross-border blockchain payments

JPMorgan continues to experiment with blockchain technology and digital assets even after its CEO attempted to dismiss the sector as a Ponzi scheme. Now, the U.S. financial institution is partnering with Visa to streamline the use of its private blockchain for cross-border payments. The partnership centers around JPMorgan’s Liink blockchain, which has been designed specifically for cross-border transfers, and Visa’s B2B connect, a cross-border payment network for banks. As Cointelegraph reported, it seems like the duo wants to develop an alternative to SWIFT, the dominant global network for secure messaging and transactions.

Crypto.com invests $145M in new European headquarters

2021 was the year of sponsorships for Crypto.com. Now, 2022 is shaping up to be the year of regulatory approvals. In light of regulatory traction in Europe, the crypto exchange announced this week that Paris, France, would become its new European headquarters. The company plans to spend roughly $145.7 million to establish its presence in France. Additional resources will be allocated to boosting the exchange’s presence across the region. It looks like Crypto.com is positioning itself for the next bull market. Most of its casual retail users probably won’t open the app until then.

Bonjour Paris

We’re excited to deepen our commitment and presence in France, by making Paris our new European regional HQ

Full details:https://t.co/nBoixpyMHi pic.twitter.com/EhkbKYUOZQ

— Crypto.com (@cryptocom) October 12, 2022

Stellar Development Foundation launches $100M fund to support native smart contract adoption

Stellar doesn’t get nearly as much airtime as it did during the 2017 crypto bubble, but the network is still working to spur adoption and innovation on its Soroban smart contract platform. This week, Stellar Development Foundation (SDF), the nonprofit organization supporting the development of the Stellar network, announced it had launched a $100 million fund to incentivize developers to build on Soroban. Timer Weller, SDF’s vice president of technology strategy, told Cointelegraph that Soroban was developed to overcome the “friction” of existing blockchain networks.

Before you go: $25K or $15K BTC — what comes first?

Bitcoin’s price action is starting to look eerily similar to 2018’s “range from hell.” And we all know what happened after that (BTC would eventually plunge from $6,000 to roughly $3,200, marking the final bottom for the cycle). In this week’s Market Report, I sat down with Benton Yaun to discuss BTC’s price trajectory and how the latest CPI inflation data could impact the market. You can watch the full replay below.

Crypto Biz is your weekly pulse of the business behind blockchain and crypto delivered directly to your inbox every Thursday.

Disclaimer: This newsletter was updated to reflect BNY Mellon’s total assets under management, which is $43 trillion.

BNY Mellon, America’s oldest bank, launches crypto services

The bank will store private keys and provide bookkeeping services equivalent to those offered to fund managers in traditional assets.

BNY Mellon launched a digital custody platform to safeguard select clients’ Ether (ETH) and Bitcoin (BTC) holdings on Oct. 11, making America’s oldest bank the first large bank in the country to offer the custody of digital assets and traditional investments on the same platform.

According to a statement, the bank will store private keys to access the funds and provide the same bookkeeping services offered to fund managers in other assets, such as stocks and bonds.

“With Digital Asset Custody, we continue our journey of trust and innovation into the evolving digital assets space, while embracing leading technology and collaborating with fintechs,” said Roman Regelman, CEO of securities services and digital at BNY Mellon.

BNY Mellon is 238 years old, possesses over $43 trillion in assets under custody or administration worldwide and, in 2021, formed an enterprise Digital Assets Unit to develop digital assets solutions and a platform to bridge digital and traditional asset custody. The bank was granted approval for crypto custody earlier this fall from the New York financial’s authority.

A recent survey from the bank revealed that 91% of institutional investors are interested in investing in tokenized products, and 41% of them hold cryptocurrency in their portfolios.

In March, the bank was selected by Circle as the custodian of its USD Coin (USDC) reserves. BNY previously announced its partnership with blockchain-data platform Chainalysis to help traditional financial institutions track and analyze cryptocurrency products, allowing large firms to manage legal risks related to cryptocurrencies.