US-based peer-to-peer payments company Circle has moved some of its USD Coin (USDC) stablecoin reserves into a fund controlled by $10 trillion asset management firm BlackRock.
In a blog post written by Circle’s chief financial officer Jeremy Fox-Geen, the stablecoin issuer says it’s working towards minimizing liquidity, counterparty, operational and reputational risks to assure USDC holders that they can redeem their crypto assets for US dollars on a 1:1 basis at any given moment.
To fulfill that goal, Fox-Geen says it’s putting some of its reserves in BlackRock’s Circle Reserve Fund.
“Through our partnership with BlackRock, we have begun investing in the Circle Reserve Fund to manage a portion of the USDC reserves. We expect the reserve composition will continue to be 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, LLC and its portfolio will consist of cash and short-dated U.S. Treasuries.”
According to the blog post, the fund is only available to Circle. Fox-Geen also says they plan to invest the proceeds of the firm’s existing Treasury holdings in BlackRock’s Circle Reserve Fund.
Last month, Circle CEO Jeremy Allaire said the firm was aiming to be a full reserve digital bank – as opposed to a fractional reserve bank that only has a portion of depositors funds on hand at a given time.
“We want to be a full reserve digital currency bank. We’d like a framework for that to exist. We’d like to apply for that license if such a license was available… We think the world needs a full reserve banking system. We think the world needs much safer base layer money and that’s what stablecoins represent. And so if that becomes something that say the Federal Reserve supervised, and we were sort of chartered and operated in that way and have the amount of supervision that goes with that, that’s absolutely something we will do.”
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