Circle, the issuer of the widely used stablecoin USDC, has recently introduced a feature enabling the transfer of shares from the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) into USDC.
This development was officially announced on April 11, highlighting a new smart contract functionality designed to facilitate these transactions.
This smart contract capability allows for the seamless exchange of BUIDL shares for USDC directly on the secondary market.
The company promises a “near-instant” process for converting BUIDL into USDC, making this service available to investors around the clock.
BUIDL, which launched in March 2024, is a pioneering tokenized fund by BlackRock that exists on the Ethereum blockchain.
It provides U.S. dollar yields by tokenizing investments, primarily in U.S. Treasury bills.
As an ERC-20 token, BUIDL is part of a new breed of digital liquidity funds that leverage blockchain technology for enhanced accessibility and efficiency.
This initiative marks BlackRock’s first foray into tokenized funds, though the firm is already a significant player in the cryptocurrency space.
It operates the rapidly growing spot Bitcoin exchange-traded fund (ETF) in the U.S. and manages the iShares Bitcoin Trust (IBIT), one of the earliest spot Bitcoin ETFs approved by the U.S. Securities and Exchange Commission. As of April 10, IBIT holds 266,580 BTC, valued at approximately $18.5 billion.
Circle’s co-founder and CEO, Jeremy Allaire, commented on the broader implications of such technological advancements in finance.
“Tokenizing assets is but one important dimension of solving investor pain points. USDC enables investors to move out of tokenized assets at speed, lowering costs and removing friction,” Allaire explained.
The collaboration between Circle and BlackRock is not new; it dates back to 2022 when Circle began allocating part of its USDC reserves to the Circle Reserve Fund, managed by BlackRock Advisors.
This fund, a registered Rule 2a-7 government money market fund, primarily invests in cash and short-dated U.S. Treasuries, maintaining a portfolio mix of about 20% cash and 80% short-duration U.S. Treasuries.
This partnership underscores a continued trend of integrating traditional financial assets with innovative cryptocurrency solutions, further bridging the gap between conventional finance and blockchain technology.
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