Hashnote USYC (US Yield Coin) — is a tokenized money market instrument designed primarily for institutional liquidity management and earning yield from short-term U.S. government assets. Although it is often compared with yield-bearing stablecoins, USYC is technically an on-chain representation of shares in the Hashnote International Short Duration Yield Fund Ltd. (SDYF), rather than a conventional payment stablecoin with a fixed $1 price. The fund's underlying assets include short-term U.S. Treasury securities and reverse repo transactions backed by government securities. Following Circle's acquisition of Hashnote in 2025, USYC became part of a broader infrastructure combining tokenized funds, USDC, and institutional settlement.
Contents:
- What Is Hashnote USYC and How the Tokenized Fund Works
- How USYC Generates Yield and How Its Token Price Is Determined
- USYC vs. Stablecoins: Key Differences
- Blockchains, USDC, and Institutional Use Cases for USYC
- Hashnote USYC: Regulation, Liquidity, and Key Risks
1. What Is Hashnote USYC and How the Tokenized Fund Works
USYC represents an interest in the Hashnote International Short Duration Yield Fund Ltd. — a money market fund focused on short-duration instruments. Its capital is primarily allocated to reverse repo transactions backed by U.S. government securities, while part of the portfolio may be invested in Treasury Bills. This structure allows the fund to generate returns linked to short-term interest rates while maintaining relatively low portfolio duration.
Blockchain serves as the infrastructure for recording and transferring rights to fund shares. After completing the onboarding process, an investor's address is added to an allowlist. When subscribing, the user transfers USDC through a dedicated Teller smart contract, after which the corresponding amount of USYC is issued. Token transfers are synchronized with the SDYF share register, linking the on-chain position to the investor's legal interest in the fund.
In January 2025, Circle announced its acquisition of Hashnote. At the time of the transaction, USYC was already one of the largest tokenized products in the Treasury and money market asset sector. Circle integrated the product into its institutional infrastructure, where USDC can serve as a settlement asset and USYC as a yield-bearing instrument for capital that is not required for immediate payments.
Under the current structure, USYC is issued by Circle International Bermuda Limited, which is regulated by the Bermuda Monetary Authority. The token itself represents an interest in a Cayman Islands mutual fund licensed by the Cayman Islands Monetary Authority. This distinguishes the product from a typical permissionless DeFi token: eligibility to hold USYC depends on the investor's legal status, KYC/AML procedures, and approval of the specific wallet.
2. How USYC Generates Yield and How Its Token Price Is Determined
USYC yield is not generated through the issuance of a proprietary incentive token or through DeFi lending. Instead, it comes from the underlying SDYF portfolio, which primarily uses reverse repo transactions backed by U.S. government securities as well as Treasury Bills. As a result, the product's yield changes with conditions in the U.S. money market and is not fixed.
USYC also differs from most U.S. dollar stablecoins in how accumulated yield is reflected. Its price is not required to remain constantly at $1. The value is calculated based on the portfolio's Net Asset Value divided by the number of USYC tokens outstanding. As interest income accumulates, NAV per share may increase, with the corresponding change reflected in the token price.
- Reverse repo — the primary source of short-term yield, backed by U.S. government securities.
- U.S. Treasury Bills — part of the portfolio may be allocated to short-term Treasury securities.
- NAV — determines the value of each share and, consequently, the price of USYC.
- Oracle — provides current token valuation data on-chain.
- USDC — is used for subscriptions and redemptions of USYC.
Valuation information is published through an on-chain oracle. The calculation takes into account the Prime Brokerage account, subscriptions, redemptions, and accrued interest. This model allows USYC to function as a blockchain representation of an investment position while remaining compatible with programmable financial infrastructure.
The term yield-bearing therefore applies to USYC, but its yield should not be considered guaranteed. Returns depend on interest rates, the performance of the underlying fund, fees, and market conditions. Hashnote also notes that even fixed-income instruments, including Treasury Bills, may fluctuate in value.
3. USYC vs. Stablecoins: Key Differences
USYC is often compared with yield-bearing stablecoins because of its dollar-denominated asset structure, liquidity profile, and ability to be exchanged for USDC. However, the two belong to different legal and economic categories. USDC is a payment stablecoin designed to maintain a value close to one U.S. dollar, while USYC represents an interest in an investment fund and reflects the fund's performance through changes in the token's value.
Another important distinction concerns access. Conventional permissionless stablecoins can generally be transferred between compatible wallets without separately onboarding each holder. USYC is a permissioned asset: holders must complete onboarding and KYC/AML procedures, while their wallets must be added to an allowlist. According to current documentation, the product is available to eligible institutional entities that are not U.S. Persons and is subject to a minimum investment requirement.
| Parameter | USYC | Traditional Stablecoin |
|---|---|---|
| Asset Type | Tokenized fund interest | Digital payment asset |
| Underlying Value | Fund NAV | Typically around $1 |
| Holder Yield | Generated by the fund's underlying assets | Usually absent at the token level |
| Primary Assets | Reverse repo and U.S. Treasury Bills | Depends on the issuer's model |
| Access | Permissioned, KYC/AML and allowlist | Often freely transferable on-chain |
| Primary Use | Treasury management and yield-bearing collateral | Payments, settlement, and liquidity |
In practice, USYC and USDC can complement each other. An institution can hold excess capital in USYC to gain exposure to the returns generated by underlying money market assets and convert the position into USDC when liquidity is required. This creates a model in which a payment stablecoin is used for settlement, while a tokenized fund is used to manage temporarily idle capital.
4. Blockchains, USDC, and Institutional Use Cases for USYC
USYC is designed as a multichain instrument. According to current product information, it supports Ethereum, BNB Smart Chain, Solana, NEAR, and Canton, using the appropriate token standards for each network. This multichain structure allows financial institutions to work with the same type of economic asset across multiple blockchain environments.
Subscriptions and redemptions are built around USDC. After onboarding, an eligible investor can exchange USDC for USYC through a smart contract and perform the reverse transaction when exiting the position. The documentation provides for 24/7/365 access and T+0 redemptions, although the exact speed and amount of immediately available liquidity may depend on established limits and the specific redemption mechanism.
One of the main use cases is collateral management. Instead of holding collateral exclusively in a non-yielding settlement asset, an institutional participant can use a tokenized position in a short-duration fund. In July 2025, Binance added support for USYC as yield-bearing off-exchange collateral for institutional clients trading derivatives. This model brings blockchain markets closer to traditional financial practices, where collateral can also perform an investment function.
In 2026, the use of USYC continued to expand. For example, fintech platform Reap announced the integration of the instrument into its corporate treasury management solutions. This demonstrates a broader use case for tokenized money market funds: they can serve not only crypto traders but also companies seeking to manage U.S. dollar liquidity through on-chain infrastructure.
5. Hashnote USYC: Regulation, Liquidity, and Key Risks
USYC is designed for institutional investors: holders must complete KYC/AML procedures, and their blockchain addresses are added to an allowlist. According to the documentation, the product is intended for eligible entities outside the United States that are not U.S. Persons under Regulation S. The minimum investment is $100,000.
Liquidity is supported by the portfolio's short duration, reverse repo transactions, Treasury Bills, and conversion with USDC. However, risks remain related to changes in interest rates and the value of underlying assets, as well as custodian infrastructure, smart contracts, oracles, and the blockchains used by the product.
USYC availability depends on jurisdiction, investor status, and the regulatory framework for tokenized assets. Changes to KYC/AML requirements or the fund's operating rules may also affect the conditions under which the product can be accessed and used.
USYC is therefore more accurately viewed as a tokenized money market fund with on-chain settlement rather than a conventional yield-bearing stablecoin. Integration with Circle and USDC infrastructure allows it to be used for institutional collateral and treasury management, but its yield, liquidity, and asset value are not guaranteed.
