Blackrock's Tokenized Fund Brings Legitimacy To Public Blockchains: Bernstein
BlackRock’s anticipated tokenized fund launch “brings legitimacy” to public smart contract chains like #Ethereum, as per analysts at research and brokerage firm Bernstein.
In a letter to clients on Tuesday, Gautam Chhugani and Mahika Sapra stated that the world’s largest asset manager’s decision to use the public Ethereum blockchain rather than private chains, such as JPMorgan’s Onyx, broadens interoperability and programmability in an area hitherto exclusively thought of as “retail casinos.”
They said, “Tokenised fund redemption could be on-chain with stablecoins (e.g USDC) integration. New asset classes (bonds, equities, fx stablecoins) could lead to interoperability between asset classes on-chain and scope for further programmability based on deal contract conditions.” The plumbing designed for retail speculation also begins to drive institutional utility, they continued.
Earlier this month, BlackRock announced its collaboration with financial services firm Securitize to introduce a tokenized money market fund, marking a further expansion into digital assets following the launch of a spot Bitcoin exchange-traded fund in January.
The BlackRock USD Institutional Digital Liquidity Fund (BUIDL) is a liquid fund that invests in cash, repurchase agreements (short-term borrowing agreements for dealers in government securities), and U.S. Treasury bills, according to a filing with the U.S. Securities and Exchange Commission. The filing did not provide a launch date.
Securitize will serve as the transfer and placement agent and provide the tokenization platform. BNY Mellon will ensure interoperability with traditional markets by custodying the fund’s assets.
Anchorage, Coinbase, BitGo, and Fireblocks will
act as ecosystem partners, facilitating custody
and settlement of digital assets.
Chhugani and Sapra noted that although
tokenized funds aren't groundbreaking,
BlackRock's collaboration with partners from
both traditional and crypto sectors could boost
adoption among traditional institutional clients,
easing the transition to on-chain funds.
Chhugani and Sapra suggest tokenized funds
could be a new growth area for asset managers,
moving beyond ETF investments to develop on-
chain products for revenue and cost savings.
