Bank of New York Mellon (BK) will be the main custodian of Ripple’s (XRP) U.S. dollar-pegged stablecoin.
The partnership should enhance regulatory compliance for Ripple, the issuer of both the XRP cryptocurrency and Ripple USD (RLUSD) stablecoin.
The arrangement should also boost institutional credibility for BNY Mellon, as the bank is popularly known, as well as the fast-growing stablecoin industry.
BNY Mellon is the oldest U.S. bank and primarily serves institutions and corporations.
The bank is one of many lenders and traditional financial institutions that is showing interest in stablecoins as the U.S. government rolls back restrictive cryptocurrency policies.
“BNY is committed to delivering differentiated, end-to-end solutions, designed to meet the needs of institutions across the entire digital assets ecosystem,” said the bank in a news release.
Stablecoins are cryptocurrencies whose value is pegged to another asset, typically the U.S. dollar or price of gold.
Usually, stablecoins provide the stability of traditional currencies to blockchain networks and have been praised for their speed and efficiency related to money transfers.
A custodian securely holds the assets backing a stablecoin, ensuring that the stablecoin's value remains pegged to the asset it's tied to, i.e. the U.S. dollar.
Ripple recently applied for a U.S. national bank charter and a Federal Reserve master account, which would allow the company to hold reserves directly with the central bank.
Ripple is a 13-year-old business-to-business payments firm that does much of its business outside the U.S., serving banks and payments companies. It launched the RLUSD stablecoin last December.
BNY Mellon’s first foray into the crypto industry was in 2021 when it opened a digital assets unit to finance Bitcoin (BTC) and other cryptocurrencies.
BK stock is up 20% this year and trading at $92.69 U.S. per share.
