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 after acquiring publisher Hashnote for an undisclosed amount.

USYC, or the Hashnote Short Duration Yield Coin, is backed by US Treasury bonds and reverse repurchase agreements, with a total asset value of more than $1.25 billion, according to RWA facts.

It comes as multiple companies are trying to capitalize on an expected lucrative boom for real-world asset tokenization. The move is also expected to strengthen Circle’s position against rival and stablecoin giant Tether, which launched its tokenization platform, Hadron, in November.

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

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

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

Circle CEO Jeremy Allaire said Tuesday about the partnership X there is a “huge opportunity” to “provide yield-bearing collateral to crypto market structures” 24 hours a day.

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

TMMFs are blockchain-based digital versions of traditional financial assets, such as government bonds, and offer faster ways to invest in return-generating instruments.

Plans were also announced to deploy native USDC on Canton, a blockchain tailor-made for secure and private financial applications. Canton processes more than $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 momentum.

The total value captured in the sector rose 36.9% in a year to $7.89 billion, according to DeFiLlama facts. This is expected to rise to more than $50 billion according to some estimates.

To spy an early opportunity, the world’s asset manager, BlackRock, launched its own fund on Ethereum in March last year, allowing qualified investors to earn returns in US dollars.

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

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

Edited by Sebastian Sinclair