BlackRock Enters Asset Tokenization Race With New Fund on the Ethereum Network

Asset management giant BlackRock (BLK) officially unveiled its tokenized asset fund on the Ethereum network on Wednesday.

The BlackRock USD Institutional Digital Liquidity Fund is represented by the blockchain-based BUIDL token, is fully backed by cash, U.S. Treasury bills, and repurchase agreements, and will provide yield paid out via blockchain rails every day to token holders, according to a press release.

Securitize will act as a transfer agent and tokenization platform, while BNY Mellon is the custodian of the fund’s assets, BlackRock said. Anchorage Digital Bank NA, BitGo, Coinbase, and Fireblocks also participate in the fund’s ecosystem.

BlackRock also made a “strategic investment” in Securitize, the press release added, but the terms of the deal weren’t disclosed.

“This is the latest progression of our digital assets strategy,” said Robert Mitchnick, BlackRock’s Head of Digital Assets. “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.”

The announcement came after a regulatory filing revealed that BlackRock incorporated a fund with Securitize, spurring speculations of a tokenized fund as observers pointed to blockchain transactions to seed the vehicle, CoinDesk reported Tuesday.

BlackRock is the latest traditional finance giant to enter the tokenization field after Citi, Franklin Templeton and JPMorgan have already made headways with the technology. Creating blockchain-based tokens of traditional investments such as bonds and funds – known as tokenization of real-world assets (RWA) – is a fast-growing use case for blockchains as digital assets and traditional finance (TradFi) are becoming more intertwined. Tokenized U.S. Treasuries, for example, have grown to $730 million from $100 million in early 2023 as crypto firms seek to earn a steady yield by parking their on-chain funds.

BlackRock CEO Larry Fink said earlier this year in a CNBC interview that the company’s spot BTC ETF was “stepping stones towards tokenization.”