In an innovative move marking its first foray into blockchain-based financial products, BlackRock has introduced the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), according to a press release from 20 March 2024. This groundbreaking tokenized fund, issued on the Ethereum blockchain, aims to provide qualified investors with the ability to earn US dollar yields by subscribing through Securitize Markets, LLC.
According to BlckROck’s press release, Robert Mitchnick, the Head of Digital Assets at BlackRock, expressed enthusiasm for the development, stating that BUIDL is a continuation of the firm’s strategy to solve client challenges within the digital asset space through practical solutions.
Tokenization, a process that converts rights to an asset into a digital token on a blockchain, is central to BlackRock’s strategy. By tokenizing the BUIDL fund, BlackRock facilitates benefits such as instant and transparent transactions, broader investor access to blockchain-based offerings, and seamless transferability across platforms. Notably, BNY Mellon’s role will bridge the Fund’s operations between digital and traditional financial markets, enhancing interoperability and accessibility.
Carlos Domingo, co-founder and CEO of Securitize, highlighted the transformative potential of tokenizing securities for capital markets. Domingo said that Securitize’s collaboration with BlackRock as the fund’s transfer agent and tokenization platform is a significant step toward making traditional financial products more accessible through digital technologies.
The BUIDL fund is designed to maintain a stable token value of $1, distributing dividends directly to investors’ wallets monthly. It focuses its investments on cash, U.S. Treasury bills, and repurchase agreements, aiming to provide yield while offering the benefits of blockchain technology. The fund allows for 24/7/365 token transfers among pre-approved investors and offers flexible custody options.
Key ecosystem participants for BUIDL include prominent names like Anchorage Digital Bank NA, BitGo, Coinbase, and Fireblocks, along with other infrastructure providers in the crypto industry. BlackRock Financial Management, Inc. serves as the investment manager, with Bank of New York Mellon acting as the fund’s custodian and administrator. Securitize handles tokenized share management and fund operations, while PricewaterhouseCoopers LLP is the appointed auditor through 31 December 2024.
An investment minimum of $5 million has been set for the Fund, which will issue shares under specific regulatory frameworks to ensure compliance and security for investors.
Moreover, BlackRock’s strategic investment in Securitize strengthens their partnership, with Joseph Chalom, BlackRock’s Global Head of Strategic Ecosystem Partnerships, joining Securitize’s Board of Directors.
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