With the launch of their new Ethereum fund, BlackRock joins the asset tokenization race.

BlackRock is planning to launch a brand new Ethereum-based real-world asset (RWA) tokenization fund. Additionally, the asset tokenization business Securitize was a crucial investment for the asset management behemoth.

On Wednesday, BlackRock (BLK), a major player in the asset management industry, formally introduced its tokenized asset fund on the Ethereum network.

The BUIDL token, which stands for the BlackRock USD Institutional Digital Liquidity Fund, is backed by cash, U.S. Treasury bills, and repurchase agreements. Every day, token holders will receive yield paid out using blockchain rails, as stated in the news announcement.

According to BlackRock, BNY Mellon will be in charge of safeguarding the fund's assets, while Securitize will facilitate transfers and serve as the platform for tokenization. The ecosystem that supports the fund also includes BitGo, Coinbase, Fireblocks, and Anchorage Digital Bank NA. The press statement also mentioned that BlackRock made an undisclosed "strategic investment" in Securitize.

This is the latest progression of our digital assets strategy," stated Robert Mitchnick, Head of Digital Assets at BlackRock. "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."

According to CoinDesk, the announcement followed a regulatory filing that showed BlackRock formed a fund with Securitize. This led to rumors about a tokenized fund, as blockchain transactions were seen as potential seeds for the vehicle.

Following in the footsteps of Citi, Franklin Templeton, and JPMorgan, BlackRock is the newest conventional banking behemoth to venture into tokenization. As digital assets and traditional finance (TradFi) continue to merge, one rapidly expanding use case for blockchains is the creation of tokens based on traditional investments like bonds and funds.

This process is called tokenization of real-world assets (RWA). For instance, after reaching $100 million in early 2023, tokenized U.S. Treasuries have increased to $730 million as crypto businesses aim to secure a consistent return by storing their on-chain funds.

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