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Dollar digital currencies like USD Coin (USDC) allow payments and treasury operations to be conducted on blockchains. Borrowing and lending represent one of the main use cases benefiting from the emergence of stablecoins, as these operations can be challenging to implement with traditional cryptocurrencies due to their high volatility.
Circle, the leading developer of USDC, has recently launched Circle Yield, a secured crypto investment product that enables qualified institutional investors and corporate treasuries to generate superior returns compared to what's available from banks and many fixed income markets by locking their USDC funds for periods between one and twelve months.
Central banks around the world have cut interest rates to record low levels to support the post-pandemic economic recovery by encouraging investments and household consumption, forcing businesses and institutions to choose between lower-risk alternatives like government and corporate bonds, which generally provide low returns, and higher-risk options like stocks. Circle Yield offers a balance of security, growth and predictability not found in other investments available today.
Circle Yield provides an annual percentage yield (APY) of 6-8%** as of November 2, 2021, notably higher than many fixed-rate offerings in traditional financial markets. It provides one of the easiest ways to earn APY on crypto, with Circle and other registered financial institutions managing investments for customers.
There are many ways to generate APY on crypto, and many investors are interested in the risk/return ratio when making investment decisions. So how does Circle provide rates comparable to some DeFi (decentralized finance) lending protocols?
In the case of Circle Yield, the deposited USDC funds are lent to a network of institutional counterparties that pay an interest rate to access additional capital.
Companies, miners, hedge funds and other institutional investors willing to borrow against their crypto holdings pay higher rates compared to traditional lending markets, as many banks wouldn’t accept crypto collateral.
With Circle Yield, institutions can easily earn APY on crypto. They start by signing up for a Circle Account and depositing USDC.
Businesses can invest excess working capital in crypto without the risks and volatility typically associated with bitcoin and DeFi, generating an APY of 6-8%** as of November 2, 2021. Circle Yield is fully secured and overcollateralized with Bitcoin, with all collateral held by a third-party custodian that serves more than 400 institutional clients.
Circle Yield launched earlier this year in collaboration with leading institutional crypto lender Genesis Capital****, which lends the deposited funds to institutional crypto market participants.
Circle Yield is currently open to accredited businesses and institutional investors residing in the U.S. and Switzerland, with more countries expected to be added soon.***
Corporate treasurers, asset managers and other institutions can benefit from a new asset class that comes with balanced risk under a clear regulatory framework. Circle Yield is built on USDC, the world’s fastest-growing dollar digital currency, with more than $30 billion in circulation as of November 2, 2021.
Some businesses are already benefiting from Circle Yield. Kevin O’Leary^ has followed the crypto markets for years as head of O’Leary Ventures, but remained on the sidelines until recently. His interest grew along with the need to amplify returns on cash holdings, with bank rates and many fixed income market yields persisting at or near historic lows. He hired a team to help him get involved in crypto in a compliant way, evaluated his options and chose to allocate into Circle Yield.
“This is the new asset class. Circle Yield was the right choice, and it works because the team is very focused on compliance. Circle Yield is one of the best catalysts to the success of O’Leary Ventures in the digital asset world.”
– Kevin O'Leary
Qualified businesses that are eligible, accredited investors can use Circle Yield in several ways to achieve their investment targets:
^Kevin O’Leary has invested in and is currently a stockholder of Circle Internet Financial Limited.
* Offering subject to business approval, geographical availability***, and regulatory authorization, and there is no guarantee that the product will become available in a specific timeframe or to a specific customer or geography. Circle Yield product offered through Circle International Bermuda Limited (“Circle Bermuda”). Circle Bermuda has entered into lending arrangements with one or more institutional borrowers, including Genesis Global Capital, LLC. These lenders pledge and transfer Bitcoin into custody with a third party custodian as collateral for their USDC borrowings and Circle Yield investors benefit from a security interest in Circle Bermuda’s security interest in the pledged Bitcoin.
Circle Account and money transmission services are provided by Circle Internet Financial, LLC. Circle Internet Financial, LLC, NMLS # 1201441, is a licensed provider of money transmission services. A full list of Circle’s licenses can be found here.
Circle is not a bank; your Circle Account is not a bank account, and any funds are not insured by the Federal Deposit Insurance Corporation, the Securities Investor Protection Corporation or by any US or foreign government agency, insurance fund, person or entity. For investors in the United States, investments described in this communication are offered by Circle Bermuda to “accredited investors” only in accordance with Regulation D, Rule 506(c) of the Securities Action of 1933, as amended. While Circle Bermuda is regulated by the Bermuda Monetary Authority for digital asset business, Circle Bermuda is not engaged in banking and deposit taking activities and is not regulated for these purposes. You should carefully conduct your own investigations and analyses in connection with any participation in this product, including its objectives, risk factors, fees and expenses and the information set forth in these materials. All prospective participants in the products described herein are advised to consult with their legal, accounting and tax advisers regarding any potential participation. Please read the offering documents carefully before you invest. Additional information is available upon request.
**Rates are purely indicative and are subject to change pending availability, approval and market conditions.
*** Not currently available in the following U.S. states: Alaska, Minnesota, New York and Hawaii.
****Learn more about Genesis Global Capital, LLC here.
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