The massive launch of ProShares’ new ETF for the fast-growing $300 billion stablecoin world has fueled speculation that a major stablecoin issuer may be involved.
The fund, called the ProShares GENIUS Money Market ETF (IQMM), is designed to hold short-term U.S. Treasury securities and meet the reserve requirements set forth in the GENIUS Act. The GENIUS Act is a federal law that regulates issuers of stablecoins in the United States. This is the first ETF built specifically to comply with these rules, a positioning that may have caught the attention of some of the biggest players in the cryptocurrency space.
The ETF’s first-day trading volume reached $17 billion, indicating that some large players are allocating capital to the fund. For context, BlackRock’s spot Bitcoin ETF, one of the most anticipated products in years, hit $1 billion in first-day trading volume.
Fund transfer within the circle or internal shuffle?
Such huge trading volumes have analysts speculating on the source of the inflows.
Nate Geraci, president of The ETF Store, said in an X post that the massive flow could signal a deal with a major U.S. stablecoin issuer. “From an asset perspective, I believe only Circle will remain,” he said, referring to the company behind the $74 billion USDC token.
However, Circle’s USDC main reserve fund, which is managed by BlackRock, has not seen any major changes so far. The company held nearly $64 billion in assets as of Friday, up from $59 billion at the end of January, data showed.
More likely, the initial volume came from ProShares’ own funds moving assets for cash management purposes.
Ben Johnson, director of client solutions for Morningstar Asset Management, noted that QTTT, one of ProShares’ leveraged ETFs, moved $6 billion to IQMM on the day it launched. This internal allocation could explain a large portion of the first day’s activity.
Stablecoin Reserve Handbook
Still, demand from stablecoin issuers is a real possibility. With over $300 billion in USD stablecoins in circulation, a large portion of these reserves may end up being allocated to ETFs such as IQMM.
IQMM is “currently the only purpose-built vehicle that meets GENIUS Act rules and provides high-speed liquidity,” 10x Research founder Markus Thielen wrote in a Friday note.
This could make it a first choice for U.S. issuers like Circle, Paxos and BitGo, or even banks looking to issue their own tokenized deposits under the new law. Tether operates the world’s largest stablecoin, worth $184 billion in USDT tokens, and the company has also launched a stablecoin in the U.S. market with federal bank Anchorage Digital.
Thielen said that as new tokens are launched and stablecoins are increasingly regulated, tens of billions of dollars in additional assets could eventually flow into funds such as IQMM.
