US financial institution Citizens Trust Bank has announced an investment of $65 million in altcoins, which it will hold as cash reserves.
Citizens Trust Bank buys millions from this altcoin project
Cryptocurrency company Circle has announced that Atlanta-based Citizens Trust Bank, founded in 1947, will have $65 million in USDC reserves. The move follows a series of announcements that Circle allocated funds to various US-based financial institutions last year. For example, Circle reported that on April 1, 2022, BNY Mellon will hold USDC reserves. In June, the Boston-based company announced that New York Community Bancorp would hold USDC.
Additionally, Circle announced last November that it is working with Blackrock to manage some of its USDC reserves in an SEC-registered fund. “Circle’s opportunity to retain some of its growing USDC reserves means we strengthen our balance sheet and are an important part of rapidly growing new markets,” said Cynthia N. Day, president and CEO of Citizens Trust Bank. Circle also announced on Friday that it will be collaborating with Citizens Trust Bank to develop its financial literacy initiatives.
We are excited to collaborate with Citizens Trust Bank [@CTBank] on financial inclusion and digital financial literacy in Atlanta and showcase how strong partnerships build stronger communities. https://t.co/DaXB7ZhKGm
— Circle (@circle) February 24, 2023
The company said it is developing plans to expand programming to the community through Atlanta’s historic HBCUs and local schools, with a launch event scheduled for this summer and a $100,000 startup funding grant from Circle. As of February 24, 2023, Circle’s stablecoin USDC has a total value of $42.66 billion and is the second largest cryptocurrency pegged to the US dollar by market cap. According to measurements recorded on Friday, the number of USDC in circulation has decreased by 2.7% over the past 30 days.
Why is the bank’s move important to Circle?
Citizens Trust Bank is classified by the FDIC as a minority depository institution (MDI), which means that the majority of its voting stake or board of directors are minority individuals. The bank joined the Federal Reserve System in 1947.
The bank increased its deposits by $220 million in 2020 and 2021. In 2021, the last year for which publicly available information is available, Citizens financed $157 million worth of commercial, consumer and residential mortgage loans.
1/ Last year, stablecoins settled >$7tn on-chain. Current run-rate is ~$9tn/yr. This is significantly more than Mastercard (~$2.2tn), Amex (~$1tn), and Discover (<$200bn). In 2023, on-chain stablecoin volumes will surpass the largest card network, Visa, which processes ~$12tn/yr. pic.twitter.com/DMG9NpDW8t
— Peter Johnson (@TheChicagoVC) December 21, 2022
Citizens Trust is not the only US financial institution to hold USDC reserves. cryptocoin.comAs we quoted Bank of New York Mellon, Customers Bank, New York Community Bank, Silvergate Bank, Silicon Valley Bank and Signature Bank also have USDC on their balance sheets.
Stablecoin deals have grown in line with the decentralized finance boom over the past two years, with more users relying on dollar-pegged assets to maintain collateral, trade altcoins and generate returns. However, the use of stablecoins for payments remains minimal due to regulatory hurdles.
BUSD leaves the market
Paxos, the company authorized to print Binance branded BUSD, will not be able to continue printing new BUSD with the order from New York last week. Binance CEO CZ said that if BUSD is accepted as a security, it will have significant impacts on the industry. BUSD lost its dollar peg for a while after the regulation.
