Circle Has Started Building New Reserve Funds With BlackRock

Circle, the Web3.0 unicorn that is in charge of the issuance and maintenance of the USD Coin (USDC) stablecoin, has revealed it has started building a new and robust reserve fund dubbed the Circle Reserve Funds. 

According to Jeremy Fox-Geen, the company’s Chief Financial Officer, the new Circle Reserve Funds are lodged with BlackRock, further deepening its relationship with the world’s largest asset management firm.

The new reserve fund will be managed by BlackRock advisors and it will predominantly be dominated by cash and short-dated US Treasuries. As Jeremy noted, as the existing USDC Treasury matures, funds from the reserve treasury will be pulled to secure the replacement of the reserve to continually guarantee 1:1 access to users’ funds.

“The Circle Reserve Fund is only available to Circle. As our existing Treasury holdings mature, the proceeds will be used to purchase new Treasuries by the Circle Reserve Fund,” Jeremy wrote in the official announcement, “We began this process on November 3, 2022, and expect to be fully transitioned by the end of Q1 2023. The Fund is custodied at Bank of New York Mellon, which already serves as the custodian for the Treasuries that comprise the USDC reserve today.”

Stablecoin issuers are uniquely poised for extra scrutiny from regulators, market observers, and the ecosystem at large. While Circle has not been embroiled in any form of price manipulation or improved alternative asset backing for its stablecoin, its major competitor, Tether Holdings have had to respond to lawsuits and allegations directly claiming its trading and reserve asset’s impropriety.

Circle’s USDC is currently the world’s second-largest stablecoin after Tether and it has a market capitalization of $42.2 billion at the time of writing, riding on its growing utility. Per the plans to bolster its reserve, USDC will now be at a vantage point to truly live up to its name and remain stable across the board.