Circle Moves USDC Reserves To BlackRock Managed Fund
BlackRock will manage Circle's cash and treasury reserves worth $44 billion under the 'Circle Reserve Fund'. The USDC stablecoin issuers entered into a partnership with the asset manager in May.
Circle has begun moving its USDC stablecoin reserves to a fund managed by BlackRock – the world’s largest asset manager. In May, the crypto firm entered into a strategic partnership with the investment giant to lead a $400 million funding round participated in by Fidelity Management and Research, Fin Capital and Marshall Wace.
As part of the agreement, BlackRock will be the primary asset manager for Circle’s $44.1 billion reserve that backs 43.9 billion USDC tokens that is currently in circulation. The assets will be managed under BlackRock’s Circle Reserve Fund (USDXX) which invests 99.5% of its total assets in cash, U.S Treasury bills and notes. The fund solely invested in by Circle will be held by Bank of New York Mellon (BNY Mellon), who are the custodian of Circle’s cash reserves.
“Through our partnership with BlackRock, we have begun investing in the Circle Reserve Fund to manage a portion of the USDC reserves. We expect the reserve composition will continue to be approximately 20% cash and 80% short-duration U.S Treasuries,” said Jeremy Fox, the Chief Financial Officer (CFO) at Circle.
The world’s second largest stablecoin company has projected a revenue of $438 million from its reserves for this year and $2.2 billion next year. Circle expects to transfer all its reserves into the BlackRock managed fund by the end of 2023. The move comes in anticipation of a bill that will require stablecoin companies operating in the U.S to hold reserves backed by cash or U.S Treasury bills.
Last month, USDT issuers Tether announced that they will be replacing $30 billion worth of commercial paper held in reserves with U.S Treasury bonds. BlackRock is the largest fund manager in the world with assets upwards of $10 trillion under its supervision.
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