BlackRock Joins Asset Tokenization Race with New Fund on Ethereum Network

BlackRock (BLK), a leading asset management firm, has officially launched its tokenized asset fund on the Ethereum network. Introduced as the BlackRock USD Institutional Digital Liquidity Fund, it is represented by the blockchain-based BUIDL token.

This token is fully backed by cash, U.S. Treasury bills, and repurchase agreements, ensuring stability and security for investors. Yield from the fund will be distributed daily to token holders through blockchain transactions, as stated in a press release.

Securitize will serve as the transfer agent and tokenization platform for the fund, while BNY Mellon acts as its custodian, safeguarding the fund’s assets. Additionally, Anchorage Digital Bank NA, BitGo, Coinbase, and Fireblocks are all key participants in the fund’s ecosystem.

BlackRock has also made a strategic investment in Securitize, although the specific terms of the deal have not been disclosed. Robert Mitchnick, BlackRock’s Head of Digital Assets, highlighted the significance of this move, stating, “This is the latest progression of our digital assets strategy. We are focused on developing solutions in the digital assets space that address real challenges for our clients, and we are thrilled to collaborate with Securitize.”

This announcement follows a regulatory filing that revealed BlackRock’s partnership with Securitize, sparking speculation about a tokenized fund. Observers pointed to blockchain transactions as evidence of the fund’s inception. Notably, BlackRock joins other traditional finance giants like Citi, Franklin Templeton, and JPMorgan in exploring tokenization, a trend driven by the convergence of digital assets and traditional finance.

Tokenization of real-world assets (RWA), such as bonds and funds, has emerged as a rapidly growing use case for blockchain technology. For instance, the tokenized U.S. Treasuries market has seen substantial growth, reaching $730 million from $100 million in early 2023. This growth reflects increasing interest from crypto firms seeking steady yields by investing their on-chain funds.

Earlier this year, BlackRock CEO Larry Fink mentioned in a CNBC interview that the company’s spot BTC ETF marked a step towards tokenization, indicating the firm’s strategic alignment with this trend.