March 20, 2024 at 10:52 GMTModified date: March 20, 2024 at 10:52 GMT
March 20, 2024 at 10:52 GMT

BlackRock launches new tokenised asset fund on Ethereum blockchain

The fund will be based on the Ethereum blockchain and will comprise tokenised assets, a modern approach blending traditional finance with digital innovation.

BlackRock launches new tokenised asset fund on Ethereum blockchain

BlackRock, the largest asset manager globally, has made a significant move in the digital assets space by introducing the BlackRock USD Institutional Digital Liquidity Fund, abbreviated as BUIDL.

This was done through an official Form D filing with the United States Securities and Exchange Commission (SEC). The new fund, which would operate on the Ethereum blockchain, aims to bring traditional financial assets into the digital age through tokenisation.

For the same, BlackRock has partnered with the asset tokenisation firm Securitize and has set the operation base of the fund in the British Virgin Islands.

The fund will be tokenised using ERC-20 tokens, a standard for creating and issuing smart contracts on the Ethereum blockchain. This move aims to streamline transactions, enhance security, and provide a more transparent and efficient mechanism for asset management.

The concept of tokenising real-world assets is gaining momentum as it promises to enhance the efficiency and speed of financial transactions by leveraging blockchain technology.

What is BUIDL?

The BlackRock USD Institutional Digital Liquidity Fund will use an ERC-20 token, also named BUIDL, to represent investments on the Ethereum blockchain. 

This approach is set to redefine asset management by offering benefits such as immediate transaction settlements and a fortified stance against financial malpractices.

With a stringent minimum investment requirement set at $100,000, the fund targets institutional investors and aims to combat illicit financial activities through enhanced transparency and streamlined processes. Securitize’s involvement would ensure that the offering complies with regulatory standards, offering a seamless tokenisation process.

The CEO of BlackRock, Larry Fink, has publicly endorsed the move towards tokenisation, expressing his belief that it represents the future of the financial industry. 

Following the successful launch of BlackRock’s Bitcoin ETF, Fink highlighted the potential of tokenisation to streamline financial processes and enhance transparency across various asset classes.

“We believe the next step going forward will be the tokenisation of financial assets, and that means every stock, every bond […] will be on one general ledger. Every investor will have their identification, enabling us to eradicate issues surrounding illicit activities in the realm of bonds, stocks, and digital assets”, added Fink. 

Broader impact on the market

BlackRock’s reputation and influence in the launch of BUIDL could spearhead widespread acceptance and integration of tokenised assets within the financial sector.

This move also reinforces the legitimacy and expected regulatory adherence of tokenised offerings, with Securitize playing a crucial role. It seeks to usher in a new era in asset management, characterised by increased efficiency, transparency, and security.

Although specific assets to be held by the fund are not disclosed, the involvement of Securitize hints at a focus on real-world asset tokenisation. The crypto market has responded positively to this news, with Ondo Finance’s native token $ONDO showing notable performance improvements following the announcement.

This latest initiative follows BlackRock’s previous ventures into digital assets, including the launch of a spot-based Bitcoin ETF, which has significantly accumulated assets under management. The firm’s continued expansion into digital assets, including a proposed spot Ether ETF, illustrates its commitment to integrating traditional finance with digital innovation.