BlackRock could open the door to US-regulated stablecoins

Wall Street firms’ escalating involvement in the stablecoin market could speed up the development of regulations in the United States, creating a private alternative to a central bank digital currency (CBDC). 

According to crypto investor Ryan Sean Adams’ analysis, the recent launch of off-ramps in USD Coin USDCUSD for BlackRock's tokenized fund is just another step in the ongoing integration of traditional finance and stablecoin providers.

“Stablecoins will happen in the U.S. because BlackRock and the banks want them to happen. This could not be more obvious,” Adams said on X.

Circle, the issuer of the USDC stablecoin, announced on April 11 the launch of functionality that enables holders of BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) to transfer their shares to Circle in exchange for USDC. In other words, the functionality allows investors in the tokenized fund to convert their shares into stablecoins 24 hours a day, thus enhancing shareholder liquidity.

BlackRock is a major investor in Circle. In April 2022, the companies announced a strategic partnership that included BlackRock investing in Circle’s $400 million funding round. BlackRock also manages the Circle Reserve Fund, a government money market fund in which Circle is the only eligible investor.

“The new BlackRock BUIDL fund on Ethereum is a high bandwidth pipeline between U.S. Treasuries and USDC,” Adams noted, adding that Circle’s planned initial public offering (will also help stablecoins integrate with traditional markets.

BlackRock is already one of the biggest players in the crypto industry. The asset manager is behind the iShares Bitcoin Trust spot Bitcoin ETF, worth $18.5 billion as of April 10. The company recently launched its tokenized fund, BUIDL, enabling investors to buy tokens that represent shares in a fund investing in assets like U.S. Treasury bills.