The asset management giant said that tokenization is a key focus of its digital asset strategy.
BlackRock, the world’s largest asset manager, has filed to launch a tokenized fund as funds from Fidelity International and HSBC have been put on blockchains.
BlackRock said in a filing with the US Securities and Exchange Commission that it aims launch a tokenized fund – BlackRock USD Institutional Digital Liquidity Fund (BUIDL). Qualified investors have the opportunity to earn U.S. dollar yields by subscribing to the fund through Securitize Markets, the digital securities issuance platform.
Breaking: @BlackRock has tokenized their BlackRock USD Institutional Digital Liquidity Fund into 100 shares on an @ethereum erc20 contract 👀
SEC filing:https://t.co/27bSZA9OF4
Ethereum contract:https://t.co/p6w8tuzqwa pic.twitter.com/bLxX72L8Ek
— MartyParty (@martypartymusic) March 19, 2024
The fund manager said in a statement that tokenization remains a key focus of its digital asset strategy. Tokenization enables the issuance and trading of ownership on a blockchain, expands investor access to on-chain offerings, provides instantaneous and transparent settlement, and allows for transfers across platforms. Investors can also transfer their tokens 24/7/365 to other pre-approved investors. BNY Mellon will enable interoperability for the fund between digital and traditional markets.
Robert Mitchnick, BlackRock
Robert Mitchnick, BlackRock’s head of digital assets, said in a statement: “This is the latest progression of our digital assets strategy. 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.”
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. The fund invests 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.
Fund participants will also have flexible custody options allowing them to choose how to hold their tokens. The initial ecosystem participants in BUIDL include Anchorage Digital Bank NA, BitGo, Coinbase, and Fireblocks.
The news is out: We have partnered with Blackrock, the largest asset manager in the world, to help them bring their assets on-chain starting with BUIDL. They have invested in our company and joined our board, and I could not be more proud of the team at @Securitize that made this… https://t.co/ZtAOnQPXn0
— Carlos Domingo (@carlosdomingo) March 21, 2024
Carlos Domingo, co-founder and chief executive of Securitize, said in a statement: “Tokenization of securities could fundamentally transform capital markets. Securitize is proud to be BlackRock’s transfer agent, tokenization platform and placement agent of choice in digitizing and expanding access to its investment products.”
Paul Kremsky, trader and global head of business development at Cumberland, the cryptocurrency trading unit of market maker DRW Holdings, wrote in a paper that various projects have emerged in the last few years for tokenizing money funds but there is no “right” approach.
Paul Kremsky, Cumberland
“This is a space that will be heavily regulated, so structuring these projects correctly will make all the difference,” added Kremsky. “More so than any other sector of digital assets, this is a niche upon which the largest names from TradFi have set their sights, including asset managers with assets under management in the trillions and some of the largest bulge bracket banks.”
Kremsky cited a report from ratings agency Fitch which said money market fund AUM at the beginning of 2023 was $8.4 trillion, about six times larger than crypto’s entire market cap.
“If 1.5% of that issuance were to move on-chain, it would be larger than the current market cap of stablecoins,” Kremsky. “If 7.5% of it moved on-chain, it would be larger than bitcoin.”
Fidelity International’s Institutional Liquidity Fund
On 19 March 2024 Sygnum,the global digital asset banking group, said in a statement it had tokenized an investment in Fidelity International’s $6.9bn Institutional Liquidity Fund.
Sygnum invested $50m into the Fidelity fund on behalf of its client Matter Labs, a software development, engineering, and cryptography company focused on creating scaling solutions for Ethereum, the second largest cryptocurrency.
The investment marks the first step of Matter Labs’ long-term strategy to move its treasury reserves on-chain with institutional custodians like Sygnum according to the statement.
The banking group issued security tokens on the zkSync blockchain which are on-chain representations of units in the Fidelity fund that it said will act as secure and transparent “Proof-of-Reserves” for Matter Labs’ treasury reserves.
Jürg Rimle, Fidelity International
Jürg Rimle, country head Switzerland at Fidelity International, said in a statement: “We welcome the partnership with Sygnum Bank that expands access for professional and institutional investors – and strengthens the trusted bridge between the emerging digital asset economy and traditional finance.”
The tokenization of real world assets (RWA) increased 74% in 2023 to $2.5bn according to Sygnum.
“Their enhanced liquidity and accessibility – as well as the increased attractiveness of traditional yield-bearing instruments – is driving new levels of transparency, efficiency and new product creation in financial markets,” added Sygnum.
HSBC Euro Liquidity Fund
On 19 March 2024 digital securities investment platform moreliquid also said in a statement that it was tokenizing the HSBC Euro Liquidity Fund by introducing the Moreliquid Money Market EUR (MMMEUR) token on the Polygon network.
The MMMEUR token has monthly coupon payments and moreliquid said it can be managed, transferred, or used as collateral for loans.
Clement Daudy, moretoken
Clement Daudy, chief executive of moreliquid, said in a statement: “Thanks to the regulatory clarity in Europe on the tokenization of financial assets, asset managers are increasingly turning to digital finance to reduce their costs and access a wider investor base.”
MMMEUR was developed in collaboration with Tokeny and can be purchased directly through cryptocurrency wallets.
Luc Falempin, chief executive of Tokeny said in a statement that money market funds are currently in high demand from the buy-side, especially on the blockchain.
“With a successful implementation, we foresee a significant influx of assets onto the blockchain, expanding the market and unveiling promising use cases for the industry,” added Falempin.
