Circle, the renowned issuer of the stablecoin USDC, has recently announced its strategy to bring its Hashnote Tokenized Money Market Fund (TMMF) under the regulatory oversight of Bermuda’s Digital Assets Business Act (DABA). This pivotal move aims to align the fund with international regulatory standards while enhancing its operational capabilities.
Circle acquired Hashnote earlier this year, which is recognized for its issuance of USDY, currently the largest tokenized treasury and money market fund boasting a total value locked (TVL) of approximately $900 million. However, it is noteworthy that the fund’s TVL has seen a decline from a previous high of $1.9 billion as of early January.
Hashnote USYC TVL over time. Source: DefiLlama
Circle has outlined its intent to seamlessly integrate USDY with USDC, facilitating interactions between the TMMF and the stablecoin. The company anticipates that this integration will position USDY as a preferred form of yield-bearing collateral on various cryptocurrency exchanges, appealing to brokers and custodians alike.
The choice of Bermuda for such a strategic decision is significant, given that it is home to one of the pioneering legal frameworks governing digital assets. Circle’s proactive approach led it to be the first cryptocurrency firm to secure a license under the Bermuda Monetary Authority back in September 2021. DABA currently supports multiple licensing categories for entities operating within its scope.
Tokenized Real-World Assets: Unlocking a $30 Trillion Opportunity
A recent analysis by Colin Butler, head of institutional capital at Polygon, has emphasized the immense potential of tokenized real-world assets (RWAs), projecting it as a $30-trillion market. This sentiment is supported by trends indicating that high-net-worth individuals are increasingly drawn to alternative asset classes as tokenization fosters liquidity in previously illiquid markets.
In conjunction, the market capitalization of tokenized US Treasurys is anticipated to exceed $3 billion by the close of 2024, with current estimates placing it at around $4.2 billion. Hashnote presently ranks as the second-largest protocol for tokenized US Treasurys, despite experiencing a 21% decrease in market cap over the last month.
As of late 2024, the overall market valuation for RWAs surpassed $15.2 billion, driven predominantly by institutional engagements in tokenization across diverse asset classes, from real estate to carbon credits. This surge marks a significant milestone in the maturation of asset tokenization, with the market recently peaking at $17.1 billion.
Tokenization is not just a fleeting trend; it is revolutionizing various financial sectors by generating liquidity for illiquid assets and harnessing blockchain technology for seamless transactions. As the applications for tokenization broaden across diverse asset types, its relevance in modern finance will continue to grow.
