Circle enables USDC transfers for BlackRock’s first tokenized fund

Circle, the issuer of major stablecoin USDC (USDC), has enabled transfers of BlackRock USD Institutional Digital Liquidity Fund (BUIDL) shares to its stablecoin.

Circle officially announced on April 11 a new smart contract functionality that would allow BUIDL holders to transfer their shares to Circle for USDC.

Circle’s smart contract functionality enables the frictionless transfer of BUIDL shares in exchange for USDC to Circle on the secondary market. According to the announcement, the smart contract will enable “near-instant” BUIDL off-ramp that serves investors 24/7.

Launched by BlackRock in March 2024, BUIDL is a tokenized fund that operates on the Ethereum blockchain to offer U.S. dollar yields through tokenization.

BUIDL allows investors to purchase tokens representing shares in the fund, which invests in assets like U.S. Treasury bills. The fund is referred to as the “digital liquidity fund” because it is digitized in the form of tokens on the Ethereum blockchain and operates as an ERC-20 token called BUIDL.

The new investment tool is the first tokenized fund introduced by BlackRock, which is also the operator of the fastest-growing spot Bitcoin (BTC) exchange-traded fund (ETF) in the United States.

According to Circle co-founder and CEO Jeremy Allaire, tokenization of real-world assets is a rapidly emerging product category.

“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 stated.

Related: Binance follows Circle and drops USDC support on Tron

BlackRock is one of the biggest players in the cryptocurrency industry, operating the iShares Bitcoin Trust (IBIT) spot Bitcoin ETF, which holds 266,580 BTC, worth $18.5 billion as of April 10. IBIT was among the first spot Bitcoin ETFs to launch in January 2024 following historic approval by the U.S. Securities and Exchange Commission.

BlackRock’s latest collaboration with Circle follows years of cooperation in the crypto industry. In 2022, Circle started investing in the Circle Reserve Fund to manage a portion of the USDC reserves in cooperation with BlackRock. The firm expected its composition to continue to be around 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, and its portfolio consists of cash and short-dated U.S. Treasuries.

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