Key Takeaways
- Ripple has tapped BNY Mellon as the primary custodian for RLUSD reserves.
- The Wall Street bank also counts Circle as a customer.
- Banking partnerships form an integral part of the stablecoin ecosystem
As the adoption of its stablecoin grows, Ripple has selected BNY Mellon as the primary custodian of RLUSD reserves.
Circle also relies on the Wall Street giant for custody solutions, so BNY Mellon has emerged as an important banking partner for the booming stablecoin sector.
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Ripple Taps BNY Mellon for RLUSD Custody Services
Like other dollar-pegged stablecoins, RLUSD is collateralized by a mix of U.S. Treasuries, money-market funds, and bank deposits.
As Ripple moves to integrate stablecoins into the XRPL ecosystem, it needs banking partners that can support high-value reserve management and redemptions at an institutional scale.
“BNY brings together demonstrable custody expertise and a strong commitment to financial innovation in this rapidly changing landscape, as well as a forward-thinking approach to digital asset infrastructure, making them the ideal partner for Ripple and RLUSD,” stated Jack McDonald, Ripple’s Senior Vice President of Stablecoins.
Most stablecoin issuers hold accounts with multiple large U.S. banks to minimize risk, spreading their cash reserves across different custodians.
However, BNY Mellon has secured a prominent position in the sector, serving as the primary banking partner for both Ripple and Circle.
Wall Street Competes For Stablecoin Customers
While BNY Mellon handles Circle’s cash reserves, the USDC issuer relies on BlackRock to manage its Treasuries.
Meanwhile, the world’s largest stablecoin issuer, Tether, has a custody relationship with Cantor Fitzgerald, which holds its Treasury reserves and manages deposits at multiple U.S. banks.
Standard Chartered is another key player in the space, which provides Paxos with cash management services.
With the total market capitalization of all stablecoins now exceeding $250 billion, the market for reserve management services is expanding rapidly, presenting a major opportunity for Wall Street firms.
However, stablecoin issuers are increasingly looking to develop custody solutions in-house, cutting out the middleman and ultimately lowering their operational costs.
For example, Paxos acts as its own qualified custodian for Treasuries. But at present, all stablecoin issuers still need banks to secure their cash reserves.
Circle Eyes Bank Charter
In June, Circle revealed that it has formally submitted an application to establish a national trust bank.
With a bank charter, Circle can hold USDC reserves directly, reducing its reliance on third parties for custody.
As stablecoin regulation advances in the U.S. and elsewhere, banking licenses could help legitimize issuers and empower them to offer a greater range of services.
For Circle and Ripple, which are racing to corner the institutional stablecoin market, banking partnerships and charters form part of the infrastructure they will need to process payments that could one day reach billions of dollars per hour.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
