April 19, 2024

In its latest foray into crypto, financial giant BlackRock has launched its first tokenized fund on the Ethereum blockchain. The BlackRock USD Institutional Digital Liquidity Fund, also known as BUIDL, is fully collateralized by cash, U.S. Treasury bills, and repurchase agreements. It provides qualified investors with an opportunity to earn U.S. dollar yields.

BlackRock has partnered with Securitize as a transfer agent and tokenization platform, and BNY Mellon as the custodian of the fund’s assets. The fund’s ecosystem also includes Anchorage Digital Bank NA, BitGo, Coinbase, and Fireblocks, which will provide infrastructure to the fund.

“This is the latest progression of our digital assets strategy,” said Robert Mitchnick, BlackRock’s head of digital assets. “We are focused on developing solutions in the digital assets space that help solve real problems for our clients, and we are excited to work with Securitize.”

The BlackRock USD Institutional Digital Liquidity Fund was first registered in the British Virgin Islands last year. It filed a U.S. Securities and Exchange Commission Form D for the fund.

“BUIDL will offer investors important benefits by enabling the issuance and trading of ownership on a blockchain, expanding investor access to on-chain offerings, providing instantaneous and transparent settlement, and allowing for transfers across platforms,” BlackRock said.

What is tokenization and how the BlackRock Fund will work

In simple terms, tokenization is the process of representing real-world assets digitally on the blockchain. BlackRock has consistently mentioned its digital asset strategy involves the launch of ETFs and the tokenization of financial assets.

For BUIDL, qualified investors who have at least $25 million in investable assets will create a digital wallet and sign up with Securitize to be able to invest in the fund. The fund’s initial investment minimum is $5 million. Investors can purchase a token at a stable price of $1 and earn interest in the form of the token. The tokens can be easily transferred from one wallet to another on the blockchain network.

Everybody wants a piece of blockchain

BlackRock’s latest move comes a few months after it launched the largest Bitcoin ETF, iShares Bitcoin Trust, which has continued to attract record inflows. Other investment titans, such as Franklin Templeton and Ondo Finance, have both introduced tokenized versions of money-market funds and ETFs, respectively.

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