According to 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 registered with the U.S. Securities and Exchange Commission (SEC).
Circle Deepens Relationship with BlackRock
In mid-April 2022, Circle detailed that it had entered an investment agreement with BlackRock Inc., Fin Capital, Fidelity Management and Research, and Marshall Wace LLP. The $400 million funding round was announced alongside BlackRock’s plan to expand the two companies’ existing relationship, with BlackRock managing “significant assets for the reserves that back USDC.”
Six months later, on Nov. 3, 2022, Circle disclosed that it would be deepening its relationship with BlackRock, and it 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 CFO Jeremy Fox-Green explained. He 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 “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 expects to be fully transitioned by the end of March 2023.
USDC Circulation Declines, EURC to Launch on Solana Next Year
Circle says the fund is held by Bank of New York Mellon, which has already been a custodian for USDC’s reserves composed of U.S. Treasuries. Circle’s Nov. 3 announcement follows the number of USDC in circulation declining significantly over the past few months.
Additionally, in mid-June 2022, 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.
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