Yesterday, the launch of the first tokenized fund by BlackRock was announced: with this, the largest asset manager also enters the world of asset tokenization.
After launching one of the first ETFs on Bitcoin spot on US exchanges in January, with this move BlackRock effectively continues its descent into the crypto sector.
Summary
BlackRock’s tokenized fund: BUIDL
The new tokenized fund will be called BlackRock USD Institutional Digital Liquidity Fund (BUIDL), and it will be on the Ethereum network.
This is effectively a fund issued on a public and decentralized blockchain, and will offer qualified investors the opportunity to earn returns in US dollars by subscribing through Securitize Markets.
Thanks to the tokenization of the fund, BUIDL aims to offer investors some advantages derived from issuance and trading on the blockchain, thus expanding investors’ access to on-chain offerings, while also providing instant and transparent settlements. Additionally, transfers between different platforms will also be allowed.
BNY Mellon will enable interoperability of the fund between traditional markets and new digital markets.
BNY Mellon, the second largest American investment bank, began to approach the crypto world at the end of 2022, launching a platform dedicated to its clients to buy cryptocurrencies.
BUIDL will seek to offer a stable value of $1 per token, but will pay out daily dividends accrued directly to investors’ wallets.
The Fund will invest 100% of its assets in dollars, US Treasury bonds, and repurchase agreements, allowing investors to earn returns while keeping the token on the blockchain.
This will allow them to transfer tokens 24 hours a day, 7 days a week, 365 days a year, to other pre-approved investors.
The first participants in the BUIDL ecosystem are Anchorage Digital Bank NA, BitGo, Coinbase, and Fireblocks.
The minimum initial investment in the fund is 5 million dollars.
BlackRock and cryptocurrencies
The investment manager of the Fund will be BlackRock Financial Management, and the custodian and administrator of the assets will be Bank of New York Mellon.
The transfer agent and tokenization platform will be Securitize, to manage tokenized shares, subscriptions, refunds, and fund distributions. The placement agent will be Securitize Markets, while the auditor will be PricewaterhouseCoopers LLP.
With the launch of this fund, not only does BlackRock enter the world of Ethereum, after entering the world of Bitcoin, but thanks to a strategic investment in Securitize, it effectively becomes part of the crypto world.
Indeed, the global head of strategic partnerships for BlackRock’s ecosystems, Joseph Chalom, has been appointed to the board of directors of Securitize.
Securitize in turn is a company that specifically deals with the tokenization of real world assets (RWA), and acts as a registered broker-dealer with Finra/SIPC to manage the primary market of RWAs and an alternative trading system.
BlackRock is instead the world’s largest asset manager. It is a traditional financial company founded in 1988 in New York that mainly focuses on helping investors build savings for a lifetime, making investments easier and more convenient.
BlackRock: Tokenization of Real Assets
It has been years since we have been hearing about the tokenization of real assets (Real World Asset, or RWA).
The problem is that it has always been very difficult to ensure that the tokens issued on the blockchain truly correspond to the ownership of RWA.
In this case, the guarantee is provided not only by BlackRock itself, the world’s largest asset manager, but also by the custody of BNY Mellon and independent auditors.
The fact is that tokenized shares of a fund can be traded as easily as ETH or other crypto tokens, with much greater speed and breadth.
Obviously, being a security in all respects, they require both a specific approval from financial authorities and platforms that comply with all regulations in this regard.
In other words, BUIDL tokens cannot be traded on crypto exchanges, at least for now.
Comments on BlackRock’s move: tokenization of real-world assets
BlackRock has stated that tokenization is a key objective of its new strategy related to digital assets.
The head of digital assets at BlackRock, Robert Mitchnick, stated:
“This is the latest evolution of our strategy for digital assets. We are focused on developing solutions in the digital asset sector that help solve real problems for our clients and we are excited to work with Securitize.”
The co-founder and CEO of Securitize, Carlos Domingo, added:
“Tokenization of securities could radically transform capital markets. Today’s news shows that traditional financial products are becoming more accessible through digitization. Securitize is proud to be the transfer agent, tokenization platform, and preferred placement agent for BlackRock in digitizing and expanding access to its investment products.”
