Circle Internet Financial has made a significant move by acquiring Hashnote, the company behind US Yield Coin (USYC). This deal brings together the second-largest stablecoin issuer and the biggest on-chain money fund by market cap.
On January 21, Circle announced that this acquisition will help USYC become a preferred option for yield-bearing collateral on crypto exchanges. It will also work well with custodians and prime brokers.
Hashnote’s USDY is currently the most popular tokenized money fund, holding a total value locked (TVL) of about $1.25 billion, according to RWA.xyz.
As part of this acquisition, Circle is teaming up with DRW, one of the largest institutional crypto traders. This partnership aims to enhance liquidity and settlement capabilities in both USDC and USYC. The goal? To make collateral management more efficient and seamless.
Circle plans to fully integrate USYC with USDC, allowing for easy access between tokenized money market fund collateral and USDC. This integration is a key part of their strategy.
Circle’s USD Coin (USDC) has a market capitalization of around $48 billion, making it the second most popular stablecoin. Tether’s USDt (USDT) leads the pack with a market cap of about $138 billion, as reported by CoinGecko on January 21.
Since December, USDC has been gaining traction against USDT. This shift comes amid concerns about Tether’s compliance with the Markets in Crypto-Assets Regulation (MiCA), which is the EU's framework aimed at regulating the crypto market.
Tokenized RWAs, or digital tokens that represent claims on assets like US Treasury bonds and artwork, present a massive market opportunity—valued at $30 trillion globally. Colin Butler, from Polygon, highlighted this potential back in August.
There’s a growing demand for products that tokenize money market funds, which typically include US Treasury bills (T-bills) and other highly liquid assets.
Hashnote’s USDY faces competition from funds like the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) and the Franklin OnChain US Government Money Fund (FOBXX). Their TVLs are around $630 million and $525 million, respectively.
In an October report, the US Treasury Department noted that tokenizing T-bills could lead to operational improvements and innovation in the Treasury market. However, they also warned about potential risks to financial stability.