ProShares’ new ETF created for the fast-growing world of stablecoins, valued at $300 billion, had a massive launch, fueling speculation that a major stablecoin issuer could be involved.
The fund, called ProShares GENIUS Money Market ETF (IQMM), is designed to hold short-term U.S. Treasury bonds and meet reserve requirements set out in the GENIUS Act, a federal law that regulates stablecoin issuers in the U.S. It’s the first ETF specifically structured to conform to those rules, and that positioning may have caught the attention of some of crypto’s biggest players.
The ETF recorded a whopping $17 billion in trading volume on its first day, suggesting that some big players were allocating funds to the fund. To put it in context, BlackRock’s bitcoin spot ETF, one of the most anticipated launches in many years, saw $1 billion in volume on the first day.
Circle of moving funds or internal mix?
The huge volume has left analysts speculating about the origin of the inflows.
Nate Geraci, president of The ETF Store, said in an
However, Circle’s main reserve fund for USDC, managed by BlackRock, has not shown any major changes so far. It had nearly $64 billion in assets as of Friday, up from $59 billion at the end of January, the data show.
The initial volume most likely came from ProShares’ own funds moving assets for cash management purposes.
Ben Johnson, head of client solutions for asset management at Morningstar, noted that one of ProShares’ leveraged ETFs, QTTT, moved $6 billion into IQMM on the day it launched. That kind of internal allocation would explain a lot of the first day’s activity.
Guide to stablecoin reserves
Still, demand from stablecoin issuers is a real possibility. With over $300 billion worth of US dollar stablecoins in circulation, a significant portion of those reserves could eventually be allocated to ETFs like IQMM.
Markus Thielen, founder of 10x Research, wrote in a Friday report that IQMM is “currently the only purpose-built tool” that complies with the GENIUS Act rules while providing high-velocity liquidity.
That could make it an option for US-based issuers like Circle, Paxos and BitGo, and even banks looking to issue their own tokenized deposits under the new law. Tether, which runs the world’s largest stablecoin with the $184 billion USDT token, has also launched a stablecoin with federal bank Anchorage Digital in the US market.
As stablecoins become increasingly regulated with the launch of new tokens, tens of billions in additional assets could eventually flow into funds like IQMM, Thielen said.
