Circle Scoops ‘World’s Largest’ Tokenized Money Market Fund Amid Sector Boom

Stablecoin issuer Circle has brought the world’s largest tokenized money market fund under its control following its acquisition of issuer Hashnote for an undisclosed sum. 

USYC, or the Hashnote Short Duration Yield Coin, is backed by U.S. Treasury debt and reverse repurchase agreements, with a total asset value of over $1.25 billion, according to RWA data.

It comes as multiple businesses seek to tap into an anticipated lucrative boom for real-world asset tokenization. The move is also expected to bolster Circle’s standing against rival and stablecoin giant Tether, which launched its tokenization platform, Hadron, in November.

Supporting the integration, Circle has partnered with DRW subsidiary Cumberland, a major institutional crypto trading firm, which will underpin the integration between the fund and Circle’s stablecoin, USDC.

Cumberland will expand liquidity and settlement capabilities for USDC and USYC in a bid to drive broader adoption in both crypto and traditional capital markets, according to a statement on Tuesday.

The integration is expected to place USYC as a preferred yield-bearing collateral for exchanges, custodians, and prime brokers in both crypto and traditional finance markets, Circle said.

Speaking on the partnership, Circle’s CEO Jeremy Allaire said Tuesday on X there exists an “enormous opportunity” to “bring yield-bearing collateral to crypto market structures” around the clock.

“One of the Holy Grails of capital markets is the ability to move between cash and collateral instantly,” he said. “We are unlocking this with a focus on the well-established crypto capital markets.”

TMMFs are blockchain-based digital versions of traditional financial assets, such as Treasury bills, offering faster ways to invest in yield-generating instruments.

Plans to deploy native USDC on Canton, a blockchain tailored for secure and private financial applications, were also announced. Canton processes over $3.6 trillion in tokenized RWAs and facilitates more than $1.5 trillion in monthly repo transactions, the companies said.

The tokenization of real-world assets, which converts ownership rights of physical assets into blockchain-based tokens, is gaining traction.

The total value locked in the sector has risen 36.9% in a year to $7.89 billion, as per DeFiLlama data. That’s expected to balloon to more than $50 billion by some estimates.

Spying an early opportunity, the world’s asset manager, BlackRock, launched a fund of its own on Ethereum in March of last year, allowing qualified investors to earn U.S. dollar yields. 

Dubbed the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), the vehicle reportedly contains more than $500 million in assets under management.

“Circle is leading the way in bringing the most important building blocks of money onchain, fostering a more scalable model of global institutional adoption of crypto infrastructure, while also paving the way for onchain money to become the core of traditional financial markets,” Allaire said in his post.

Edited by Sebastian Sinclair