Circle-Hashnote deal looks to ease movement between cash, yield

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Stablecoin issuer Circle has acquired Hashnote, the company that created the largest tokenized money market fund.

Circle is the company behind USDC, a stablecoin with a market cap that has grown to $48 billion. Call it tokenized cash if you like; Circle CEO Jeremy Allaire did in a Tuesday X space.

But now there’s also growing interest in bringing more real-world assets onchain, the executive noted. Outside of stablecoins, the largest category within the segment is tokenized Treasurys/money market funds.

Franklin Templeton launched its OnChain US Government Money Fund (FOBXX) — a yield-bearing alternative to stablecoins — in 2021. Asset management giant BlackRock launched a competing product, called BUIDL , last year.

Hashnote’s version of that is USYC US Yield Coin (USYC). It’s the onchain representation of its Short Duration Yield Fund (SDYF), which holds short-term T-bills. Assets deployed into USYC stand at roughly $1.5 billion, accounting for about half the tokenized Treasurys space. 

“We see this as a key building block now,” Allaire said. “The problem that we want to solve is, how can market participants…use yield-bearing collateral, but instantly enable it to be used as cash and to create a sort of 24/7, 365 continuous model for how you can move between cash and yield?”

The Circle CEO added: “That’s what this unlocks.” 

The Hashnote deal is essentially part of the broader goal of taking the benefits of crypto — constant, globally available market infrastructure — and bringing that over to the TradFi world, lowering costs and boosting efficiency. 

Circle is partnering with trading firm DRW via its subsidiary Cumberland, which will expand liquidity and settlement capabilities in USDC and USYC. The stablecoin issuer also said it plans to deploy USDC on the public blockchain Canton. 

Whether trillions of dollars worth of assets come onto the blockchain — and how quickly — will depend on institutions seeing enough value in emerging use cases, Ripple’s James Wallis told me in October. 

Perhaps this Circle deal will accelerate those entities seeing such benefits across the segment. 

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