Circle Starts Moving USDC Reserves Into a Blackrock-Managed Fund, Firm Expects to Be ‘Fully Transitioned’ Next Year

According to the crypto firm Circle Internet Financial, the company is “deepening” its partnership with the world’s largest asset manager Blackrock. Circle disclosed that it has started to transfer USDC reserves into a Blackrock-managed fund that’s registered with the U.S. Securities and Exchange Commission (SEC).

In mid-April 2022, Circle detailed that the company entered an investment agreement with Blackrock Inc., Fin Capital, Fidelity Management and Research, and Marshall Wace LLP. The investment was a $400 million funding round and during the announcement, Blackrock explained how Circle and the New York-based multi-national investment company would expand the two companies’ existing relationship. It was also revealed that Blackrock would be used by Circle for “managing significant assets for the reserves that back USDC.”

Six months later, Circle disclosed on Nov. 3, 2022, that the company would be deepening its relationship with Blackrock, and Circle has started to move USDC reserves into a Blackrock-managed fund. “Through our partnership with Blackrock, we have begun investing in the Circle Reserve Fund to manage a portion of the USDC reserves,” Circle’s chief financial officer (CFO) Jeremy Fox-Green explained. The Circle CFO added:

We expect the reserve composition will continue to be approximately 20% cash and 80% short-duration U.S. Treasuries.

The investment objective of the Circle Reserve Fund (USDXX) is to “seek current income as is consistent with liquidity and stability of principal.” Circle is the only investor and the fund invests in “at least 99.5% of its total assets in cash, U.S. Treasury bills, notes, and other obligations.” According to Circle’s announcement, the company hopes to be fully transitioned by the end of March 2023.

Circle says the fund is held by Bank of New York Mellon as the financial institution has already been a custodian for USDC’s reserves that are comprised of U.S. Treasuries. Circle’s announcement on Nov. 3 follows the number of USDC in circulation decreasing rapidly during the last few months.

Additionally, in mid-June, Circle announced the launch of a euro-backed stablecoin called euro coin (EURC). Marcus Boorstin, Circle’s director of engineering, announced this week at a Solana-centric conference that EURC would be minted on Solana next year.

What do you think about Circle’s blog post about deepening its relationship with the world’s largest asset manager Blackrock? Let us know what you think about this subject in the comments section below.