Circle Shifts USYC Into Longer-Dated Treasury Bills

Circle, the issuer of USDC, has shifted the investments backing its USYC tokenized money market product from mainly overnight reverse repos into longer-dated U.S. Treasury bills. The portfolio now includes bills with maturities of up to six months.

Holders will keep using the same token and USDC transaction process, although the speed of a redemption still depends on available liquidity.

Treasury Bills Replace USYC’s Overnight Investment Focus

Circle announced the change on Nov. 9. In its announcement, the company emphasized continuity for investors:

“Same token. Same issuer. Same subscribe and redeem flows in USDC.”

The previous strategy largely involved lending cash overnight against U.S. government securities. Treasury bills instead give the fund direct exposure to government debt with a set maturity, although they can also be sold before that date.

Holding a bill to maturity locks in the return available at purchase. If the fund sells sooner, the price it receives can change with market interest rates.

Circle’s announcement did not give an updated weighted-average maturity, which measures how long the portfolio’s investments have left to run.

One-Block Redemptions Depend on Available Liquidity

Redemption requests below the available instant-redemption capacity settle within one blockchain block. How quickly that happens varies by network, so a one-block transaction does not take the same number of seconds everywhere.

Requests above that capacity generally settle on the same or next business day. Circle also offers separately arranged instant redemptions for a fee, but its announcement did not state the available capacity in dollars.

For institutions using USYC as trading collateral, the difference affects how quickly they can turn their holdings into USDC to meet funding needs. USYC’s interface also displays available redemption liquidity in real time.

Investors Still Need Approval to Hold and Transfer USYC

Each USYC token represents a share in the Hashnote International Short Duration Fund Ltd., a Cayman Islands registered mutual fund. Circle International Bermuda Limited serves as its token administrator.

The product is available to eligible non-U.S. investors, with a $100,000 investment minimum. Investors must complete onboarding before their wallets receive permission to hold, mint or redeem USYC, and transfers are checked against wallet permissions.

The transfer agent records fund shares and mirrors them on-chain through the tokens. Meanwhile, the fund calculates USYC’s price by dividing its net asset value by the number of tokens outstanding, reflecting holders’ investment returns in the token price. The fund normally publishes price updates once per business day after reconciling the previous day’s investment activity.