Circle Acquires Hashnote to Grow Yield-Bearing Crypto Products

Circle, the issuer of the USDC stablecoin, has acquired tokenization startup Hashnote, a company incubated by Cumberland Labs, the web3 venture studio backed by trading giant DRW. This strategic move, announced alongside a partnership with DRW's crypto market-making arm, aims to expand the use of yield-bearing collateral in the crypto market and further bridge the gap between traditional finance and decentralized finance.

Hashnote's US Yield Coin (USYC) Takes Center Stage

While the financial terms of the deal were not disclosed, Hashnote's previous $5 million seed investment from Cumberland Labs provides context for the startup's value. Hashnote is known for its U.S. Yield Coin (USYC), the largest tokenized money market fund globally, boasting over $1.25 billion deployed.

Circle plans to integrate USYC with its USDC stablecoin, enabling seamless, 24/7/365 convertibility between the two. This integration is expected to make USYC a leading option for yield-bearing collateral on crypto exchanges and with custodians and prime brokers.

A Strategic Partnership: Circle and DRW Join Forces

"There is an enormous and immediate opportunity to bring yield-bearing collateral into crypto market structures," stated Jeremy Allaire, CEO and Chairman of Circle, in a post on X. He further highlighted the strategic partnership with DRW's Cumberland, which will expand liquidity and settlement services for both USDC and USYC, potentially boosting institutional adoption.

Allaire also revealed plans to deploy USDC on the Canton Network, a public blockchain designed for private financial transactions. With USYC already supported on Canton, this integration will facilitate seamless convertibility between collateral and cash for on-chain use in traditional financial markets.

Tokenization: The Next Big Wave in Finance?

The acquisition and partnership come as tokenization, the process of representing real-world assets as digital tokens on a blockchain, gains traction. According to Boston Consulting Group, tokenized funds could see a massive surge in assets under management, growing from around $3.5 billion today to over $600 billion by 2030. Even regulators are taking notice, with the U.S. Commodity Futures Trading Commission exploring guidelines for using tokenized assets as collateral.