NY Fed Policy Change Could Squash Stablecoin Issuer Circle’s Hope for Fed Access

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NY Fed Policy Change Could Squash Stablecoin Issuer Circle’s Hope for Fed Access
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Funds structured as stablecoin issuer Circle’s BlackRock-managed USDC reserve fund “generally will be deemed ineligible” for the NY Fed’s reverse repurchase program under the new rules. sndr_krisztian reports

) Wednesday in a way that could prevent stablecoin issuer Circle from accessing the prized Fed facility.by the NY Fed, funds “organized for a single beneficial owner,” registered as “2a-7 funds” at the Securities and Exchange Commission , “generally will be deemed ineligible” under the new rules.

The Circle Reserve Fund, managed by global investment management giant BlackRock Advisors, appears to fall into this category.lets selected counterparties – money market funds, banks – lend overnight to the Fed at a fixed rate, currently at 4.8%. While the facility was originally created as a stabilization tool for the financial system, it has become a highly attractive vehicle to earn high yield with minimal counterparty risk.

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