FINANCE

Circle partners with BlackRock to bring its USDC reserves into repurchase agreements

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Circle partners with BlackRock to bring its USDC reserves into repurchase agreements

According to the information released by stablecoin issuer Circle, Circle is collaborating with asset management group BlackRock Advisors to begin moving the reserves of its USDC stablecoin to a dedicated fund established by BlackRock and registered with the U.S. Securities and Exchange Commission (SEC). CFO Jeremy Fox-Geen stated that the ultimate goal is to apply for the fund to enter the Federal Reserve's FOMC RRP reverse repurchase agreement.

Circle's Latest Reserve Figures

According to the latest figures released by Circle as of 10/27, the circulating supply of USDC is 43.9 billion with a reserve of 44.1 billion USD. Of this reserve, approximately 8.4 billion (about 20%) is in cash, and 35.7 billion (about 80%) is in short-term U.S. government securities.

Circle Reserve Fund

In order to make Circle's stablecoin reserve more transparent and trustworthy for investors, Circle has partnered with BlackRock Advisors, LLC, a subsidiary of BlackRock, to register a dedicated fund with the U.S. Securities and Exchange Commission (SEC) called the Circle Reserve Fund, a 2a-7 government money market fund. This fund is exclusive to Circle, and its investment portfolio includes cash and short-term U.S. government bonds, with custody provided by The Bank of New York Mellon.

As Circle's government bond assets mature, the proceeds will be transferred to the Circle Reserve Fund, with the transition starting on November 3rd and expected to be completed by the end of the first quarter of 2023. The original 20% cash reserve will continue to be held by the existing partner banks to maintain the quick liquidity needed for customer redemptions.

Jeremy Fox-Geen, CFO of Circle, explained in an interview with CoinDesk that this reserve allocation will benefit USDC and the ecosystem. However, he also clarified that this is a temporary measure as BlackRock's ultimate goal is to apply for the fund to enter the Federal Reserve's FOMC RRP reverse repurchase agreement, ensuring that Circle's cash reserves ultimately reside within the FOMC.