Investment titan BlackRock has taken another step into digital assets revealing an Ethereum-based tokenised fund, the 'BlackRock USD Institutional Digital Liquidity Fund' (BUIDL). The initiative was disclosed in a filing with the U.S. Securities and Exchange Commission (SEC) and public statement this week.
Partnering with tokenisation firm Securitize, BlackRock established the fund, domiciled in the British Virgin Islands last year. The Ethereum blockchain serves as the bedrock for the venture, with blockchain data confirming an initial capitalisation of $100 million in Circle's USDC stablecoin.
BUIDL will provide qualified investors with the opportunity to earn U.S. dollar yields by subscribing to the Fund through Securitize Markets, LLC, a tokenisation platform for wholesale investors. Blackrock has also made a strategic investment in the firm.
Fund interests are represented by the blockchain-based BUIDL token. The Fund will hold cash, U.S. Treasury bills, and repurchase agreements. 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.
Robert Mitchnick, BlackRock's Head of Digital Assets stated:
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.
The move is a continuation of BlackRock's foray into the digital asset space, evidenced by its listing of a Bitcoin exchange-traded fund (ETF) earlier this year, which swiftly amassed over USD $15 billion in assets. Furthermore, the company has also filed to launch an Ethereum ETF which is under review by the US Securities and Exchange Commission.
BlackRock's CEO, Larry Fink, has been an ardent proponent of tokenisation in recent times, which he reiterated in a recent CNBC interview, emphasising the transformative potential of tokenization across financial markets.
However, BlackRock's announcement took an unforeseen twist following the public revelation of its Ethereum wallet address. Crypto enthusiasts seized the opportunity to send the wallet which holds $100 million in USDC an assortment of tokens, including memecoins and non-fungible tokens (NFTs).
It has also been reported that BlackRock received 0.97 ETH (worth more than USD $3,000 at current prices) through the Tornado Cash platform. The platform was controversially sanctioned by the United States Department of the Treasury's Office of Foreign Assets Control (OFAC) in 2022. This "dusting attack" may require Blackrock to block fund assets due to sanctions considerations. Naturally, some crypto enthusiasts found humour in this development:
Despite these unexpected (and somewhat humorous) developments, BUIDL offers accredited investors an avenue to accrue yield in USD through a tokenised mechanism. Facilitated by Securitize Markets, investors can seamlessly subscribe to the fund, leveraging the benefits of blockchain technology, including direct issuance, enhanced transparency, and immediate settlements.
Once a critic of cryptocurrencies, Larry Fink's evolving stance reflects broader shifts within the financial landscape, signaling a departure from skepticism towards embracing blockchain and digital assets' transformative potential.
Written by Luke Higgins and Steven Pettigrove