Circle acquires Hashnote in tokenization expansion

Stablecoin issuer Circle announced three updates aimed at improving access to tokenized yield-bearing products and institutional digital asset liquidity.

Circle, the provider of crypto’s second-largest stablecoin (USDC), has acquired Hashnote, the company behind the $1.3 billion on-chain money market USYC.

This expansion into tokenized products will integrate Hashnote’s U.S. Yield Coin with USDC, addressing “an enormous and immediate opportunity to bring yield-bearing collateral into crypto market structure,” Circle CEO Jeremy Allaire said in a statement.

Hashnote, which launched in February 2023, was financed by a $5 million investment from Cumberland Labs, a crypto venture startup backed by institutional trading firm DRW.

As more and more institutions get involved in the digital asset market, we are taking what are common practices in traditional finance and importing those onchain, but with the incredible super powers of global, real-time settlement, programmability and composability.  Indeed, one of the holy grails of capital markets is the ability to move between cash and collateral instantly.

Jeremy Allaire, Circle CEO

Circle has also partnered with crypto market maker Cumberland, an offshoot of DRW, to enhance liquidity and operations for USDC and USYC, aiming to attract more institutional participants in the digital asset space.

Additionally, Circle plans to issue its USDC stablecoin on Canton, a decentralized network designed to settle private transactions. Allaire stated that USYC’s presence on Canton will enable “24/7/365 convertibility between collateral and cash for use in TradFi markets on-chain.”

The $3.5 billion tokenization market continues to gain attention from crypto users, institutions, and regulators. Tokenization leverages blockchain technology to mint real-world assets as digital tokens, enabling traders to access these products on-chain.

According to Fortune, the global tokenization market could jump to a $13 billion ecosystem by 2032. Federal U.S. watchdogs like the  Commodity Futures Trading Commission reportedly mulled new rules for the industry, an idea that may gain traction with incoming pro-crypto officials like Trump-picked Caroline Pham.