ProShares’ new ETF, designed for the fast-growing world of stablecoins and estimated at $300 billion, has launched massively, 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 the reserve requirements set forth in the GENIUS Act, a federal law regulating stablecoin issuers in the United States. This is the first ETF structured specifically to accommodate these rules, and this positioning may have caught the attention of some of the biggest players in crypto.
The ETF saw a whopping $17 billion in trading volume on its first day, suggesting some big players were allocating to the fund. As a reminder, BlackRock’s bitcoin spot ETF – one of the most anticipated launches in many years – saw $1 billion in first-day volume.
Moving funds in a circle or internal reshuffling?
This massive volume has left analysts speculating about the source of these inflows.
Nate Geraci, president of The ETF Store, said in an article that the large flows could signal a deal with a major U.S.-based stablecoin issuer. “Looking at the assets, I think it would just leave Circle,” he said, referring to the company behind the $74 billion USDC token.
However, Circle’s main reserve fund for USDC, managed by BlackRock, has so far shown no major changes. It held nearly $64 billion in assets as of Friday, up from $59 billion at the end of January, the data showed.
What is more likely is that the initial volume 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 its launch day. This type of internal allocation would explain much of the first day’s activity.
Playbook for stablecoin reserves
Nonetheless, demand from stablecoin issuers is a real possibility. With over $300 billion worth of US dollar stablecoins in circulation, a significant portion of these reserves could potentially be allocated to ETFs like IQMM.
Markus Thielen, founder of 10x Research, wrote in a report released Friday that IQMM is “currently the only purpose-built tool” that meets GENIUS Act rules while providing high-speed liquidity.
This could make it a compelling choice for US-based issuers like Circle, Paxos and BitGo – and even for banks looking to issue their own token deposits under the new law. Tether, which runs the world’s largest stablecoin with the $184 billion USDT token, has also deployed a stablecoin with federal bank Anchorage Digital in the US market.
As stablecoins become more regulated with the launch of new tokens, tens of billions in additional assets could eventually flow into funds like IQMM, Thielen said.
