ProShares’ stablecoin-ready ETF posts ‘insane’ $17B trading debut

A cash market fund focusing on issuers regulated underneath the U.S stablecoin regulation, GENIUS Act, has made a brand new report for debut buying and selling quantity. 

The ProShares GENIUS Cash Market ETF (NYSE: IQMM) noticed a whopping $17 billion in buying and selling quantity.

For context, BlackRock’s iShares Bitcoin ETF (IBIT) noticed $1 billion in day-one quantity, whereas its different product, the BlackRock ESG ETF, noticed $2 billion. 

This was eight occasions the earlier report, famous Bloomberg ETF analyst Eric Balchunas.

He added, 

“Insane: That $17B goes to indicate up as flows/belongings tonight. The place is $ coming from? Both means, I used to be unsuitable about this ETF.”

Supply: Bloomberg 

Is Circle behind the report debut?

Responding to Balchunas, one other ETF skilled, Nate Geraci, speculated, 

“Would assume ProShares minimize a cope with one of many main U.S.-based stablecoin issuers…Taking a look at belongings, consider that may solely go away Circle.”

However Ben Johnson, head of shopper options at Morningstar, clarified that the product was funded by different ProShares funds for simpler money administration functions. 

So, why GENIUS Act-inspired? The U.S stablecoin regulation has a number of devices that can be utilized as reserve belongings for issued stablecoin tokens. Among the permitted reserves embrace money and money equivalents, short-dated U.S. Treasury payments, and cash market funds targeted on money administration. 

This makes it simpler to redeem and to cater to rising demand if customers money out en masse from stablecoins into fiat with out triggering a financial institution run or risking broader monetary markets. 

And that’s the place the ProShares ETF falls: an MMF targeted on stablecoin reserves, possible within the hope that issuers could go for it for simpler money administration, too. It’s unclear whether or not it would entice these potential issuers. 

Why the SEC’s 2% ‘haircut’ is nice for stablecoins

In the meantime, the stablecoin sector bought one other win after a latest SEC guideline. The regulator stated cost stablecoin will now have 2% haircut, much like cash market funds.

Previously, stablecoins had a 100% ‘haircut’, that means holding them had no capital profit. Should you had $100 million, it will be seen as $0 for capital functions. Now, it may be valued at $98 million. 

The change means stablecoin holders can have extra buying and selling stock, mortgage capability, and general monetary exercise. 

For his half, Jeremy Allaire, CEO of Circle, hailed the transfer as optimistic for stablecoin adoption. 

“It is a large win for USDC adoption in capital markets. Nice progress.”

Last Abstract 

• ProShares’ GENIUS Act-inspired ETF set a brand new report, hitting $17 billion in day-one buying and selling quantity. 
• Circle CEO hailed the SEC’s 2% haircut for stablecoin as a possible catalyst for USDC adoption.