Circle has overhauled the asset backing of Hashnote International Short Duration Fund Ltd., which manages the USYC money market fund. The portfolio, previously allocated to overnight reverse repos, has been shifted into US Treasury bills with maturities of up to six months.
This shift alters how yields are locked in without changing the underlying technical infrastructure.
How Yield Accrues to Token Value
Unlike USDC, which maintains a non-interest-bearing 1:1 peg, USYC is a tokenized money market instrument that accrues yield directly into the token’s exchange rate. Subscriptions and redemptions continue to use USDC, with no changes to the issuing entity or the underlying smart contracts.
Circle International Bermuda Limited holds the token administration mandate under an official license from the Bermuda Monetary Authority (BMA). The token’s supporting infrastructure is actively operating cross-chain across six blockchain networks: Ethereum, Solana, BNB Chain, NEAR, Canton, and Arc.
Off-Exchange Collateral Utility
Eligible non-US investors can access the instrument with a minimum initial investment of $100,000. Circle charges a 0.04% subscription fee and a 0.03% redemption fee, both waived for the first $1 million in combined daily volume. Beyond those two fees, the manager collects a 10% performance fee on generated yields.
When it comes to liquidity, instant onchain redemptions settle within a single network block as long as withdrawal volume remains within available capacity limits. If a redemption request exceeds that liquidity threshold, settlement is deferred to the same or following business day.
In institutional markets, USYC is widely used as off-exchange collateral for derivatives trading. This mechanism allows market participants to post trade margin without needing to deposit assets onto centralized exchanges, including through tripartite custody integrations on Binance.
Consequences of the Shift to Six-Month Maturities
Allocating assets to US Treasury bills with maturities of up to six months provides yield certainty until the maturity date arrives. However, the longer duration compared to overnight reverse repo instruments increases exposure to benchmark interest rate fluctuations.
For institutional investors, the locked-in yield now comes accompanied by interest rate risk that they must shoulder themselves.
Reported via crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
