The BlackRock Fund 'Tokenizes' Cash, T-Bills

BlackRock Inc., which manages the world's fastest-growing bitcoin ETF, is expanding into digital assets with its first investment vehicle combining cash and U.S. Treasury notes transferred to a crypto network.

The world's largest asset manager's first fund to "tokenize" physical assets on the Ethereum blockchain is available to qualified investors, according to an emailed press statement. Investors can subscribe to the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) through Securitize Markets, LLC, a digital asset platform, to earn U.S. dollar yield.

In the news announcement, BlackRock announced it had invested in Securitize and that Joseph Chalom, its global head of strategic ecosystem alliances, would join the board. “This is the latest progression of our digital assets strategy,” BlackRock Head of Digital Assets Robert Mitchnick stated. “We are excited to work with Securitize on digital assets solutions that solve real problems for our clients.”

BlackRock's announcement is another indicator of traditional finance's rising interest in blockchain technology and its entry into digital assets. Traditional investments like bonds and money can be tokenized and traded on the blockchain. According to RWA, tokenized U.S. treasuries have grown from $100 million in January 2023 to almost $760 million

In its statement, BlackRock stated tokenization is a primary focus of its digital asset strategy. Investors can issue and exchange assets via blockchain technology, giving them wider access to on-chain products, “instantaneous and transparent settlement,” and cross-platform transfers, BUIDL added.

Each token costs $1. BUIDL will invest all its assets in cash, U.S. Treasurys, and buyback agreements to produce income for blockchain token holders. BlackRock said investors can transfer tokens to pre-approved investors 24/7.

Every month, the fund will pay investor cryptocurrency wallets daily accrued dividends at $1 per token. Bank of New York Mellon will administer BUIDL's assets and BlackRock Financial Management will handle its investments. Securitize will track tokenized share subscriptions, redemptions, and dividends.

Securitize will manage tokenized shares and report fund subscriptions, redemptions, and payouts as a transfer agent and tokenization platform.

“Today’s news demonstrates that traditional financial products are being made more accessible through digitization,” said Securitize co-founder and CEO Carlos Domingo. After a decade of rejections, BlackRock and nine other businesses received SEC permission for spot bitcoin ETFs this year. It awaits SEC and other financial regulatory approval on a spot Ethereum ETF.

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