Circle – the finance firm that issues USDC stablecoins – recently raised $400M from major finance firms including Blackrock, Fidelity, Marshall Wace, and Fin Capital. Among them, Blackrock has also entered a strategic partnership with Circle, and plans to explore applications for USDC in capital markets.
Stablecoins like USDC are blockchain-native fungible tokens that are value pegged to a fiat currency – such as dollars. They’re intended to provide the price stability of fiat with the programmability and transferability of digital assets.
The appetite for these products is plain to see. Over $50 billion of USDC have been issued, making it the 5th largest crypto by market cap. That makes it the second-largest stablecoin behind Tether, which has the greatest trading volume of any cryptocurrency by far.
As part of their partnership, both companies will expand their existing relationship whereby Blackrock manages significant asset reserves that are backing USDC.
“Dollar digital currencies like USDC are fueling a global economic transformation, and Circle’s technology infrastructure sits at the center of that change,” said Circle CEO Jeremy Allaire in a statement. “It’s particularly gratifying to add BlackRock as a strategic investor in the company. We look forward to developing our partnership.”
In a Twitter thread, Allaire explained that he met Blackrock’s executives, who seem interested in how “frictionless value exchange” can create economic prosperity. This appears to be a benefit that many regulators and business people are attracted to about blockchain, even if they’re not interested in crypto assets themselves.
For example, US Treasury Secretary Janet Yellen sees Bitcoin as a speculative asset, but believes other digital assets could provide “faster and cheaper” methods of payment. Meanwhile, Strike’s recent partnerships show that Bitcoin’s lightning network can be leveraged for cheap payment settlement, without needing to accept its native cryptocurrency.
President Joe Biden even called for “urgent” CBDC development in his recent executive order, which provides similar benefits to private sector stablecoins.
The new funding comes on the heels of Circle’s revised SPAC deal in February, which increased its enterprise value to $9 billion. The company plans to go public in December of this year.
Today, Circle’s primary stablecoin custodian happens to be BNY Mellon, which is America’s oldest bank. As with Blackrock, Allaire hopes that the partnership helps Circle build more bridges with the traditional finance world.