# Circle USYC, explained for advisors

> USYC is a share of a Cayman money market fund that Circle sells only to non-U.S. entities. A U.S. client cannot hold it at any level of wealth. How it works and exits.

- URL: https://riadefi.com/tokenized-assets/programs/circle-usyc/
- Section: Tokenized assets · Explainer
- Author: Jon Ragsdale
- Reviewed: 2026-09-30
- Ketju record: https://ketjuresearch.com/register/files/circle-usyc/

## The short answer

USYC is the token for shares of Hashnote International Short Duration Yield Fund Ltd., a Cayman Islands mutual fund that Circle took over when it bought Hashnote in January 2025.[^1][^2] Circle’s docs: “USYC is available only to entities that are not U.S. Persons, as defined in Regulation S under the Securities Act of 1933.”[^1] Circle’s own site labels it “Not available in the US.”[^3]

USYC sits beside BUIDL and OUSG as a private Treasury fund for large investors, but the qualified-purchaser test that governs those two does not apply. No U.S. person may hold it, however much they own, and no individual may hold it at all. The record is the [Ketju eligibility file for USYC](https://ketjuresearch.com/register/files/circle-usyc/); Ketju’s verdict is in [the USYC memo](https://ketjuresearch.com/register/circle-usyc/).

## What does the holder own?

A share of the fund, recorded at the fund’s transfer agent. Hashnote’s docs: “Ownership in SDYF is represented as shares at the Transfer Agent, and whose digital twins are represented onchain as a Smart Contract token.”[^4] The token is the on-chain copy; the fund administrator updates the share register to match it.[^5]

The fund “invests primarily in reverse repurchase agreements (reverse repo) backed by U.S. government securities.” Circle International Bermuda Limited, regulated by the Bermuda Monetary Authority, issues the token; the fund itself is licensed by the Cayman Islands Monetary Authority.[^1] Yield shows up as a rising token price, not new tokens.[^1] Circle’s quarterly report describes USYC as “intended primarily for use as collateral in digital asset markets.”[^6]

USYC and USDC are different claims on different pools. They share Circle’s administration, and USYC buys and redeems in USDC, so a stress at Circle reaches both.[^7]

## Who may hold it?

Entities outside the United States. Hashnote’s onboarding page: “USYC is only accessible to institutions outside the United States, subject to eligibility restrictions and a US$100,000 minimum investment.”[^8] An entity signs up on the investor portal, the fund administrator runs identity and anti-money-laundering checks, and a screening provider adds the wallet to the allowlist.[^8]

This is a different kind of bar from the one on BUIDL and OUSG. Those funds sort U.S. investors by wealth: a qualified purchaser owns at least $5 million in investments, or $25 million for a company investing for itself or other qualified purchasers.[^9] USYC sorts by where the investor is. No amount of wealth makes a U.S. person eligible. Individuals, trusts, and IRAs are not offered at all.[^5]

For an advisor, the practical case is the client who already holds USYC in a wallet. Ketju’s memo says a purchase on a secondary market does not make an ineligible holding lawful, and the token moves only between wallets that hold Circle’s entitlement.[^7][^4]

## Who can freeze it, and what can that key do?

Circle’s entitlements contract decides who may hold and can stop everything at once. Hashnote’s docs: “The Entitlements contract can also freeze all transactions involving USYC.” Because every action checks the sender’s role, “the Allowlist is positioned to revert all transactions.”[^4]

On Ethereum the token has no function that freezes one holder by name, but a wallet without the entitlement role cannot send or receive. The verified code lets the owner mint and lets a role holder burn tokens from a holder’s address, and the contract can be upgraded to new code.[^5] On Solana, new token accounts start frozen, and one address, DZ7j…i63y, holds the mint power, the freeze power, and the permanent delegate that can move or burn tokens in any account.[^5] Ketju has not yet read whether the keys behind these addresses are single keys or multisigs.

## How does the holder get out?

Into USDC. Circle’s docs: “Subscriptions and redemptions settle atomically in real time (T+0).”[^1] Circle’s product page, captured July 25, 2026, qualifies that: USYC “can be redeemed into USDC in near real time up to the instant-redemption capacity, with optional access to additional immediate liquidity.”[^5] Ketju’s memo records that Circle does not disclose the capacity, that amounts above it settle same day or next day, and that published fees of 4 basis points to subscribe and 3 to redeem are waived on the first $1 million of combined daily volume.[^7]

So the exit depends on three things Circle controls: the capacity, the wallet’s entitlement, and USDC itself. A holder who wants dollars needs a second step, from USDC to a bank.

## What has gone wrong or changed

| Date | What happened |
| --- | --- |
| 2023-05-01 | The fund begins.[^7] |
| 2025-01-21 | Circle announces it has acquired Hashnote, with $1.52 billion in USYC as of January 15, 2025, and plans to link USYC to USDC.[^2] |
| 2025-07-24 | Binance’s institutional clients can post USYC as off-exchange collateral for derivatives; USYC is to be issued natively on BNB Chain.[^10] |
| 2026-05-07 | Circle says USYC is “the world’s largest tokenized money market fund.”[^3] |
| 2026-09-23 | The Ketju file covers Ethereum and Solana. Ketju found no Circle publication of the BNB Chain, Canton, or NEAR contract addresses, so those are not read.[^5] |

Ketju found no loss in the fund’s value, missed redemption, or contract loss in the materials it read. The audited financials, the reverse repo counterparties, and an incident log were not public in the pages Ketju reviewed, so that finding is bounded.[^7] One correction is Ketju’s own: an earlier Ketju memo said U.S. qualified purchasers could subscribe. Circle’s current documents say otherwise, and the memo was corrected.[^7]

## What to record in the client file

- For a U.S. client: that USYC is closed to U.S. persons, and how any USYC in the client’s wallet got there.
- For a non-U.S. entity: its Regulation S status, the onboarding date, and the entitled wallet.
- The redemption capacity Circle quoted, if it quoted one, and the date of the last redemption at the position’s size.
- The client’s total exposure to Circle, counting USDC and USYC together.
- The chain and contract address, since only Ethereum and Solana are read today.
- The Ketju file’s reviewed date, so a change to eligibility, the entitlement contract, or the Solana authority reaches the client file.

## Sources

[^1]: [Circle developer docs: USYC overview](https://developers.circle.com/tokenized/usyc/overview), Circle (primary, read 2026-09-30)
[^2]: [Circle announces acquisition of Hashnote and USYC (Jan. 21, 2025)](https://www.circle.com/pressroom/circle-announces-acquisition-of-hashnote-and-usyc-tokenized-money-market-fund-alongside-strategic-partnership-with-global-trading-firm-drw), Circle (primary, read 2026-09-30)
[^3]: [Circle Reports First Quarter 2026 Results (May 11, 2026)](https://www.circle.com/pressroom/circle-reports-first-quarter-2026-results), Circle (primary, read 2026-09-30)
[^4]: [USYC docs: Product structuring](https://usyc.docs.hashnote.com/overview/product-structuring), Circle (Hashnote) (primary, read 2026-09-30)
[^5]: [Ketju eligibility file: Circle USYC (reviewed 2026-09-23)](https://ketjuresearch.com/register/files/circle-usyc/), Ketju Research (secondary, read 2026-09-30)
[^6]: [Circle Internet Group, Inc., Form 10-Q for the quarter ended June 30, 2026](https://www.sec.gov/Archives/edgar/data/1876042/000187604226000248/crcl-20260630.htm), SEC EDGAR (primary, read 2026-09-30)
[^7]: [Ketju research memo: Circle USYC](https://ketjuresearch.com/register/circle-usyc/), Ketju Research (secondary, read 2026-09-30)
[^8]: [USYC docs: Investor onboarding](https://usyc.docs.hashnote.com/overview/investor-onboarding), Circle (Hashnote) (primary, read 2026-09-30)
[^9]: [Investment Company Act §2(a)(51), definition of “qualified purchaser” (15 U.S.C. 80a-2)](https://www.govinfo.gov/content/pkg/USCODE-2023-title15/html/USCODE-2023-title15-chap2D-subchapI-sec80a-2.htm), U.S. Government Publishing Office (primary, read 2026-09-30)
[^10]: [Circle’s USYC now supported as yield-bearing off-exchange collateral for Binance’s institutional clients (July 24, 2025)](https://www.circle.com/pressroom/circles-usyc-now-supported-as-yield-bearing-off-exchange-collateral-for-binances-institutional-clients), Circle (primary, read 2026-09-30)

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Published by Ketju Research (https://ketjuresearch.com). Educational analysis only; not legal, tax, compliance, or investment advice.
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