Binance adds USYC as Circle expands yield-bearing stablecoin footprint for institutional clients

Circle, the second-largest stablecoin issuer globally, has expanded its footprint in the crypto market by enabling Binance—the world’s largest cryptocurrency exchange—to accept USYC as collateral from institutional clients. The move, announced on Thursday, marks a step toward integrating traditional and crypto finance ecosystems, with USYC offering a unique yield-sharing model distinct from conventional stablecoins like USDC and Tether. USYC, a tokenized money market fund acquired by Circle in January, distributes interest proceeds to holders, positioning it as a hybrid asset between traditional cash equivalents and digital assets [1].

The integration of USYC aligns with Binance’s efforts to address institutional demand for faster and more flexible collateral solutions. According to Circle’s Chief Business Officer Kash Razzaghi, institutional traders often use money market securities as collateral on platforms like Binance. However, these transactions can take days to settle, especially when traditional financial systems are offline. USYC, by contrast, allows for instant redemption into USDC, enabling seamless 24/7 trading [1]. Binance’s Head of VIP and Institutional, Catherine Chen, noted that post-FTX, many institutions remain cautious about holding collateral on exchanges. To mitigate this, Binance has partnered with traditional banks through its Banking Triparty initiative, allowing banks to act as custodians for assets used in crypto trading. These same partners are now collaborating with Binance to integrate USYC, enhancing settlement efficiency [1].

The partnership underscores the growing demand for yield-bearing stablecoins, which combine the stability of fiat-backed tokens with the potential for returns. USYC’s structure—backed by a diversified basket of U.S. dollar-denominated cash and short-term instruments—differentiates it from standard stablecoins, which typically maintain a 1:1 peg without generating income for holders. Circle’s acquisition of USYC in January was part of a broader strategy to diversify its stablecoin offerings, capitalizing on the rising interest in asset-backed digital tokens [1].

Binance’s announcement also highlighted the integration of cUSDO, a yield-bearing stablecoin issued by Bermuda-licensed OpenEden Digital. The addition of cUSDO further signals Binance’s commitment to expanding its collateral options for institutional clients, catering to a market increasingly seeking alternatives to traditional on-chain assets like Bitcoin. While the immediate impact may be limited to a niche group of traders, the broader trend reflects the maturation of the crypto market, as platforms and stablecoin issuers collaborate to bridge gaps between legacy financial systems and blockchain-based infrastructure [1].

The developments come as regulators and market participants continue to scrutinize the role of stablecoins in systemic risk. By offering institutional-grade collateral solutions, Circle and Binance aim to address concerns around liquidity and trust, particularly in the wake of recent crypto market turbulence. However, the success of USYC and similar tokens will depend on their adoption rates and the ability to demonstrate consistent yield generation without compromising the stability that defines the stablecoin category.

Source: [1] [title:Binance adds USYC as Circle expands footprint of its yield-bearing stablecoin] [url:https://fortune.com/crypto/2025/07/24/binance-circle-usyc/]