BlackRock Revamps Money Market Fund to Boost Stablecoin Issuers

BlackRock, a leading global investment management firm, has announced a significant overhaul of its money market fund aimed at supporting stablecoin issuers. The rebranded fund, now known as the BlackRock Select Treasury Based Liquidity Fund (BSTBL), is designed to enhance safety, liquidity, and compliance with the recently enacted GENIUS Act, which establishes federal regulations for stablecoins.

The new fund will serve the growing needs of stablecoin issuers, who typically invest customer funds in secure and liquid assets to generate returns while ensuring easy redemption options. In addition to enhancing the fund’s features, BlackRock has extended trading hours, allowing clients to engage across different time zones more effectively.

Expanding Services for Stablecoin Issuers

As BlackRock strives to establish itself as a preeminent reserve manager for stablecoin issuers, Jon Steel, the global head of product and platform for the firm’s cash management division, emphasized the company’s commitment to this emerging market. “We want to be, and we believe we are, a preeminent reserve manager,” he stated ahead of the fund’s announcement.

Historically, BlackRock has played a crucial role in managing reserves for Circle, the second-largest stablecoin issuer, overseeing the majority of its reserve fund. The revamped BSTBL fund is now set to expand its reserve management services to other issuers, thereby broadening its impact in the digital asset landscape.

The fund is not limited to stablecoin issuers; it is also available to institutional investors such as pension funds and endowments. This strategic move not only supports clients interested in issuing stablecoins but also opens up new business and distribution opportunities for BlackRock.

Stablecoins on the Rise

The market for stablecoins is rapidly expanding, with the global stablecoin market capitalization recently surpassing $316 billion. Analysts predict that total issuance could grow from approximately $280 billion today to a staggering $4 trillion by 2030.

In light of this growth, Michael Barr, a Governor of the Federal Reserve, has called for clearer regulations to ensure the trust and stability of stablecoins. He noted the potential of stablecoins while highlighting the necessity for stronger rules to protect households, businesses, and the overall financial system. Barr praised the GENIUS Act for laying down essential regulations but stressed the importance of addressing existing gaps to mitigate risks such as market disruptions.

This initiative aligns with BlackRock’s broader strategy in the cryptocurrency space. The firm has already introduced a Bitcoin Exchange-Traded Fund (ETF), an Ethereum Exchange-Traded Product (ETP), and operates BUIDL, the world’s largest tokenized money market fund that functions on a blockchain 24/7.

CEO Larry Fink expressed enthusiasm for the potential of tokenization in finance, viewing it as a critical connection between traditional finance and the burgeoning digital asset market. With over $4.5 trillion currently in digital wallets, he anticipates significant growth in this sector in the coming years.

As stablecoins continue to gain traction and tokenization stands out as a pivotal trend, BlackRock’s revamped money market fund positions the firm at the forefront of the evolving digital asset market.