Stablecoin issuer Circle buys Hashnote crypto money-market fund manager – News

Circle Internet Group Inc., the issuer of the $48 billion USD Coin stablecoin, today announced the acquisition of Hashnote Management LLC, a company that provides a tokenized money market fund with nearly $1.3 billion in assets.

Circle said as part of the deal it will integrate USDC with Hashnote’s US Yield Coin, which allows investors to gain yield-bearing interest from holding the asset. The company said that it aims to allow its users to convert easily between the two asset classes.

Stablecoins, such as USDC, are a type of cryptocurrency “pegged” to a particular traditional currency such as the U.S. dollar so that they trade one-for-one. That way a single USDC will always trade for $1.

Circle Chief Executive Jeremy Allaire said the integration of USYC and Hashnote would be a “major moment for the evolution of the stablecoin market,” because participants increasingly expect the market to be similar to traditional finance. “We helped invent tokenized cash, and are now leading the way in tokenized money markets, both of which we believe will become essential to the future of the global financial system,” he said.

In the crypto asset industry, tokenization is a process by which an underlying asset is represented as digital tokens stored on a blockchain. In these cases, tokens act like digital certificates of ownership that can represent anything of value, including physical, digital, fungible and nonfungible assets. They can include stocks, bonds, other securities and money market funds.

Hashnote’s USYC tokens provide a yield as part of investments in short-term U.S. Treasury Bills, according to the company.

Tokenization has become a major trend in the crypto industry because it can be used to turn traditional assets into digital assets. According to market research firm McKinsey & Company, the total market cap of tokenized assets under management could reach $2 trillion by 2030.

Stablecoins allow investors to move money into and out of the cryptocurrency industry easily because they do not have the volatility of other crypto assets such as bitcoin or Ethereum. This makes the development and issuance of the tokens fundamental to the growth of the industry.

Circle’s acquisition of Hashnote puts it in a better position to compete with other stablecoin issuers such as Tether Ltd., the issuer of the largest stablecoin by market cap at around $138 billion. Tether recently launched its own tokenization platform named Hadron designed to simplify converting bonds, commodities and stocks into digital tokens.

The financial terms of the deal were not disclosed.

In addition to the announcement, Circle said the company is forming a strategic partnership with high-speed trading giant DRW Holdings, which backed Hashnote through its institutional crypto trading subsidiary Cumberland. Through the partnership, Cumberland will provide settlement capabilities for USDC and USYC.

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