BlackRock Steps Into Asset Tokenization With Its First Fund On A Public Blockchain

BlackRock, the largest investment management company in the world, is launching its first tokenized fund in partnership with Securitize, a firm specializing in asset tokenization.

The investing giant is following the steps of CitiBank, Franklin Templeton, JPMorgan, and other investment firms that already offer tokenized products to their clients. Per our observations, Avalanche and Stellar were the most popular public blockchains for those projects. BlackRock has chosen Ethereum as the platform for this tokenization project.

According to a filing signed on March 14 with the U.S. Securities and Exchange Commission and published on the regulator's webpage on Monday, the Wall Street behemoth created the BlackRock USD Institutional Digital Liquidity Fund Ltd, with crypto sounding ticker BUIDL, last year.

In a press release yesterday, the financial corporation explained, "BUIDL seeks to offer a stable value of $1 per token and pays daily accrued dividends directly to investors' wallets as new tokens each month." To do that, the fund will invest "100% of its total assets in cash, U.S. Treasury bills, and repurchase agreements, allowing investors to earn yield while holding the token on the blockchain."

Tokenization refers to the minting of tokens on a blockchain. They can represent virtually anything but are usually either highly illiquid real-world assets such as real estate or art, or financial assets such as money, stocks, bonds, and commodities. Digital tokenized securities are estimated to be worth $4 to $5 trillion by 2030, according to Citi GPS.

Asset tokenization can significantly improve traditional financial markets since tokens running on a blockchain enjoy lower fees, greater liquidity, transparency, and access, helping to smooth the settlement processes and make transactions more efficient.

BlackRock's CEO Larry Fink has been championing asset tokenization in traditional finance for some time now. At a New York Times event in November 2022, the finance mogul claimed, "The next generation for the market, the next generation for securities, will be the tokenization of securities."

In an interview with Bloomberg in the days following Blackrock's spot Bitcoin ETF approval in January 2024, Fink reiterated how these products would be the future of traditional financial markets.

“We believe the next step going forward will be the tokenization of financial assets, and that means every stock, every bond […] will be on one general ledger.”

Once crypto sleuths noted that $100 million USDC moved to a wallet related to Securitize, which could be a seed investment for the new fund, users began to send meme coins and non-fungible tokens (NFTs) to the address. Thanks to community excitement, Blackrock now owns more than $100 thousand in meme cryptocurrencies and 25 NFTs.

Blackrock is becoming a prominent player in this industry. Its iShares Bitcoin Trust is the second largest after Grayscale. The firm also filed for a spot in Ethereum ETF late last year.