The InterContinental Exchange (ICE), the owner of the New York Stock Exchange (NYSE), says it plans to explore using Circle’s USDC stablecoin and the recently acquired USYC money market fund, to “develop new products and solutions”.
Specifically, it aims to use them in derivatives exchanges, clearinghouses, data services, including “building new markets” based on Circle’s products.
“We believe Circle’s stablecoins and tokenized digital currencies can play a larger role in capital markets as digital currencies become more trusted by market participants as an acceptable equivalent to the US Dollar,” said NYSE President Lynn Martin. “We are excited to explore the potential use cases for USDC and USYC across ICE’s markets.”
It follows several other recent announcements by traditional financial institutions relating to tokenization and stablecoins. Fidelity is planning to issue a stablecoin, and the CME Group has started experimenting with tokenization. Derivatives regulator the CFTC announced pilots for tokenized collateral involving tokenized assets and stablecoins.
USDC for capital markets
While Circle has long wanted its stablecoin to be used in capital markets, and discussed it when BlackRock invested a few years ago, to date its deployment in traditional finance has been limited. The Trump administration’s embrace of crypto and blockchain has changed that.
Unlike Tether, which chose to remain offshore, Circle has opted to go the onshore and regulated path. Its USDC stablecoin currently has an issuance of more than $60 billion.
However, central bank money is generally preferred for the settlement of capital market transactions. Circle is New York regulated, but chose not to become a Trust. New York chartered trusts can only issue stablecoins on approved blockchains, which to date have been a very limited range. Solana was only added last year as the second blockchain. By contrast, USDC is available natively on 19 blockchains, because Circle chose to sidestep the trust route.
For capital markets, there’s one major drawback to Circle’s approach – the lack of certainty about what might happen in the unlikely event of its bankruptcy. While it claims USDC is bankruptcy remote with BlackRock handling most reserve assets, that would have to be tested in court. If it were a trust, there would be legal certainty.
ICE’s tokenization experience
ICE first announced plans to engage in blockchain and crypto in 2018, launching Bakkt in 2019 with its first product being physically delivered Bitcoin futures. Since then the company has been through several twists and turns. This included a consumer focused rewards and crypto app that has been dropped, a New York chartered custodian that ICE very recently acquired (now we know why), and more recently the provision of white label crypto exchange services.
This was a breaking news story and has been significantly updated
