Circle acquires Hashnote in tokenization expansion

Stablecoin issuer Circle has announced three updates aimed at improving access to tokenized yield products and liquidity of institutional digital assets.

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

This expansion of tokenized products will integrate Hashnote’s US Yield Coin with USDC, addressing “a huge and immediate opportunity to bring a productive guarantee of yield into the crypto market structure,” said Jeremy Allaire, CEO of Circle, in a press release.

Hashnote, launched in February 2023, was funded by a $5 million investment from Cumberland Labs, a cryptocurrency startup backed by institutional trading firm DRW.

As more and more institutions get involved in the digital asset market, we take common practices from traditional finance and import them on-chain, but with the incredible superpowers of real-time global settlement, programmability and composability. Indeed, one of the holy grails of capital markets is the ability to instantly move from cash to collateral.

Jeremy Allaire, Circle CEO

Circle has also partnered with crypto market maker Cumberland, an offshoot of DRW, to improve the liquidity and operations of USDC and USYC, with the aim of attracting more institutional participants to the space digital assets.

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

The $3.5 billion tokenization market continues to attract attention from cryptocurrency users, institutions and regulators. Tokenization leverages blockchain technology to create real-world assets in the form of digital tokens, allowing traders to access these products on-chain.

According to Fortune, the global tokenization market could grow to a $13 billion ecosystem by 2032. US federal watchdogs like the Commodity Futures Trading Commission are reportedly mulling new rules for the industry, an idea that could gain ground with incoming pro-crypto officials like Caroline Pham, chosen by Trump.