- BlackRock is updating its Select Treasury Based Liquidity Fund (BSTBL) to comply with the GENIUS Act.
- The fund will include overnight repurchase agreements and shorter-term U.S. Treasuries, and will remove agency securities.
- This overhaul is designed to make the fund suitable as a reserve asset for U.S. payment stablecoin issuers.
- Trading hours for the fund are extended to 5:00 p.m. ET, providing issuers with greater flexibility.
- Federal officials highlight the need for stronger regulation of stablecoins, as market adoption continues to grow.
BlackRock announced significant changes to its Select Treasury Based Liquidity Fund (BSTBL) on Thursday. The update aligns the fund with the requirements of the GENIUS Act and aims to enable its use as a reserve asset by U.S. payment stablecoin issuers.
The investment firm stated that BSTBL will now hold overnight repurchase agreements and shorter-term U.S. Treasuries instead of agency securities. This adjustment is intended to enhance liquidity. Liquid, low-risk assets are crucial for stablecoins, which require the ability to quickly meet redemption demands.
Additionally, BlackRock confirmed the extension of the fund’s trading window to 5:00 p.m. Eastern Time, up from a previous cutoff at 2:30 p.m. The expanded hours are designed to provide stablecoin issuers increased flexibility for reserve management during the business day.
Despite these changes, shares of BlackRock fell 0.4% in Thursday morning trading. Retail interest and discussion around the firm, as well as various stablecoins, remained active according to market data.
Federal Reserve Governor Michael Barr stated on Thursday that there remains a need for more comprehensive regulation of stablecoins to address existing gaps and ensure their long-term stability.
U.S. stablecoin adoption has grown since the implementation of the GENIUS Act. According to DefiLlama, Tether’s USDT leads the market with a capitalization of $181 billion, followed by Circle’s USD Coin (USDC) at $75 billion. Other companies like Paypal and MetaMask have also issued their own stablecoins, PayPal USD (PYUSD) and MetaMask USD (MUSD), respectively. Recent sentiment in retail markets has been bullish for MUSD, PYUSD, and USDC, while USDT is currently viewed more cautiously by investors.
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