Circle, the company behind the popular stablecoin USDC, has introduced a new feature that allows holders of BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) shares to transfer them to USDC. This smart contract functionality enables seamless transfers of BUIDL shares to Circle in exchange for USDC on the secondary market. The announcement states that the smart contract will provide a fast and efficient off-ramp for BUIDL investors, available 24/7.
BUIDL, launched by BlackRock in March 2024, is a tokenized fund that operates on the Ethereum blockchain, offering U.S. dollar yields through tokenization. Investors can purchase tokens representing shares in the fund, which invests in assets such as U.S. Treasury bills. The fund is known as the “digital liquidity fund” because it is digitized as tokens on the Ethereum blockchain, using the ERC-20 standard, with the token name BUIDL.
This tokenized fund is the first of its kind introduced by BlackRock, which is also the operator of the fastest-growing Bitcoin (BTC) exchange-traded fund (ETF) in the United States. Jeremy Allaire, co-founder and CEO of Circle, sees the tokenization of real-world assets as a rapidly emerging product category. He believes that USDC provides investors with a quick and cost-effective way to exit tokenized assets, reducing friction in the process.
BlackRock, a major player in the cryptocurrency industry, manages the iShares Bitcoin Trust (IBIT) spot Bitcoin ETF, which currently holds 266,580 BTC, worth $18.5 billion as of April 10. IBIT was one of the first spot Bitcoin ETFs to launch in January 2024, following historic approval by the U.S. Securities and Exchange Commission.
The collaboration between BlackRock and Circle is the result of years of cooperation in the crypto industry. In 2022, Circle began investing in the Circle Reserve Fund, in partnership with BlackRock, to manage a portion of the USDC reserves. The fund’s composition is expected to remain 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, with a portfolio consisting of cash and short-dated U.S. Treasuries.