The Circle Reserve Fund Managed By BlackRock Has $12.79 Billion Invested In 

Key Points:

• Circle USDC invests 30% of its reserves, or $12.79 billion, in its government money market fund.
• The Bank Policy Institute was concerned that the BlackRock fund used for USDC stablecoin reserves would get access to quasi-Federal Reserve deposits.

According to Circle’s most recent attestation report, 30% of USDC’s reserves – or $12.79 billion – are invested in its government money market fund, the Circle Reserve Fund, managed by BlackRock.

Base on BlackRock’s disclosure daily update page, the share of USDC reserves held in the Circle Reserve Fund has climbed to about $28.6 billion, or 65%, since then.

This appears to be positive news for USDC users. Circle is ceding some of its management over USDC’s reserves to an external manager subject to SEC oversight, which eventually makes USDC safer. Transparency is also improved because USDC users can now receive regular updates from BlackRock.

Circle received $400 million in capital from BlackRock in April. At the time, the asset manager stated that it was interested in employing USDC for capital market operations. However, stablecoins are not regarded as a risk-free settlement asset. Thus, the RRP would significantly improve USDC’s risk profile.

Previously, the Bank Policy Institute expressed concern that the BlackRock fund utilized for USDC stablecoin reserves could get access to quasi Federal Reserve deposits. The Bank Policy Institute, a bank-supported think tank, wrote a blog post voicing worries that a portion of the USDC stablecoin reserves could be parked at the Federal Reserve, despite the stablecoin issuer not having a central bank account. If this were permitted, in times of uncertainty when there is a flight to quality, this may result in bank runs moving capital into the USDC stablecoin, which could be viewed as being as good as a central bank digital currency (CBDC).

Since November, BlackRock has managed a major chunk of the USDC stablecoin’s reserve assets on behalf of the stablecoin’s issuer, Circle. The Circle Reserve Vehicle, developed by BlackRock, is a customised money market fund that invests in US short-dated Treasuries. It presently handles almost two-thirds of the assets of the $44 billion stablecoin, which retains 80% of its reserves in Treasuries.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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