Circle Internet Financial announced that it had started transferring the USDC stablecoin’s holdings into a special fund established by BlackRock and registered with the US Securities and Exchange Commission (SEC).
Dubbed as the Circle Reserve Fund, the BlackRock Advisors-managed government money market fund has been in operation since May when BlackRock first sought to register it. Circle is the sole eligible investor, who has already started storing its reserves there — slated to be “fully transitioned” by the end of March.
Circle CFO Jeremy Fox-Geen said that “this is a wrapper for the USDC reserve that brings benefits of that wrapper to the USDC and the ecosystem.”
Fox-Geen added that all of the company’s short-term Treasury assets will gradually be transferred into the fund. Still, the cash reserve — which makes up around 20% of the total — will continue to be managed in partner banks as it is easier for consumers to redeem USDC anytime.
However, he noted that it was only a short-term solution because BlackRock’s ultimate objective was to promptly submit an application to enlist the fund in the Federal Reserve’s reverse-repo program. Fox-Geen stated that he intends to eventually see Circle’s cash reserve stored at the Fed because such funds are frequently given such access.
He said that these moves would “improve the risk profile and oversight and the disclosures around USDC reserve.”
According to Circle, the holdings will be kept at the Bank of New York Mellon, where the fund will be administered under the Investment Company Act of 1940, which calls for an impartial board and daily updates on the portfolio.
Fox-Geen remarked that the company is pleased by the legislative initiatives and the discussion of potentially allowing stablecoin issuers access to Fed accounts. They do, however, view their plan as a mean for them to do things quicker.
