Tokenized BlackRock Fund Brings Trading And Crypto Closer: Bernstein

(CTN News) – It is significant that BlackRock’s (BLK) first tokenized fund is being launched on a public blockchain due to the way in which the asset manager has brought together key ecosystem partners, Bernstein stated in a report on Tuesday.

In line with a growing trend to digitize mutual funds and securities on the blockchain, last week, the investment giant officially launched its first tokenized fund on the Ethereum platform.

The launch of the BlackRock USD Institutional Liquidity Fund (BUIDL) is noteworthy in that the investment manager has been able to bring together key ecosystem partners from both the traditional and the crypto worlds.

As a result, interoperability between both sides would be facilitated, and more traditional customers would be more inclined to adopt on-chain funds without experiencing any major friction, according to analysts Gautam Chhugani and Mahika Sapra.

The BUIDL token represents the fund, which is backed by cash, bills of exchange, and repurchase agreements, according to BlackRock.

According to the investment manager, Securitize will serve as the transfer agent and tokenization platform, while BNY Mellon will serve as the fund’s custodian. As part of the fund’s ecosystem, Anchorage Digital Bank NA, BitGo, Coinbase, and Fireblocks will also be involved.

This is the first major test case for institutional BlackRock holders to experience the benefits of 24/7 instant settlements on a blockchain, with greater transparency and capital efficiency, and at a lower cost.

It was stated in the report that BlackRock Ethereum’s use as a public blockchain, rather than a private blockchain, “allows for a wider design space for interoperability and programmability”. According to the article, tokenized fund redemption could take place on the blockchain using stablecoins.

The development of on-chain funds may be a new area of growth for asset managers, evolving from simply BlackRock accumulating crypto assets through exchange-traded funds (ETFs) to creating on-chain products with their own distribution and unit economics.

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