Circle, the company behind the popular stablecoin USDC, has introduced a new smart contract feature that allows holders of BlackRock USD Institutional Digital Liquidity Fund (BUIDL) shares to transfer their shares to USDC. This new functionality enables seamless transfers of BUIDL shares to Circle in exchange for USDC on the secondary market. The smart contract ensures quick and efficient off-ramp options for investors, available 24/7.
BUIDL, launched by BlackRock in March 2024, is a tokenized fund that operates on the Ethereum blockchain, providing U.S. dollar yields through tokenization. Investors can purchase tokens representing shares in the fund, which invests in assets like U.S. Treasury bills. As an ERC-20 token called BUIDL, the fund is known as a “digital liquidity fund” due to its digitized nature on the Ethereum blockchain.
This tokenized fund is the first of its kind introduced by BlackRock, a major player in the cryptocurrency industry. BlackRock is not only the operator of the fastest-growing Bitcoin ETF in the United States, but it also manages the iShares Bitcoin Trust (IBIT), which currently holds 266,580 BTC worth $18.5 billion as of April 10. IBIT was among the pioneering spot Bitcoin ETFs to be approved by the U.S. Securities and Exchange Commission and launched in January 2024.
Circle co-founder and CEO Jeremy Allaire believes that tokenizing real-world assets is a rapidly evolving product category. He emphasizes that USDC provides investors with the ability to quickly exit tokenized assets, reducing costs and eliminating friction.
BlackRock and Circle have a history of collaboration in the crypto industry. In 2022, Circle began investing in the Circle Reserve Fund, which manages a portion of the USDC reserves in partnership with BlackRock. The fund’s composition consists of approximately 20% cash and 80% short-duration U.S. Treasuries.
The Circle Reserve Fund is a registered Rule 2a-7 government money market fund managed by BlackRock Advisors. Its portfolio primarily consists of cash and short-dated U.S. Treasuries.
In conclusion, this recent collaboration between BlackRock and Circle further strengthens their long-standing partnership and highlights the growing trend of asset tokenization in the market.