BlackRock Launches Fund That 'Tokenizes' Cash, T-Bills

BlackRock Inc., which runs the world's fastest growing spot bitcoin ETF, is diving deeper into digital assets with its first investment vehicle offering cash and U.S. Treasury bills rendered as electronic copies and transferred to a crypto network.

The fund, offered to qualified investors according to an emailed press release, is the first by the world's largest asset manager that will "tokenize" physical assets, with those tokens recorded on the Ethereum blockchain. The BlackRock USD Institutional Digital Liquidity Fund (BUIDL) will enable investors to earn yield in U.S. dollars by subscribing to the new product through Securitize Markets, LLC, a platform that allows for the issuing and trading of digital assets. 

BlackRock said in the press release that it had invested in Securitize and that Joseph Chalom, BlackRock’s global head of strategic ecosystem partnerships would assume a Securitize board seat. 

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

BlackRock’s announcement is the once cryptocurrency-skeptical company’s latest step into the digital asset space and another sign of traditional finance’s rapidly growing interest in blockchain technology. Tokenization of real-world assets allows investors to generate blockchain-based tokens of traditional investments, including bonds and funds. For example, tokenized U.S. treasuries have mushroomed to nearly $760 million from $100 million in January 2023, according to RWA.xyz, an analytics firm focused on tokenized assets.

“Tokenization remains a key focus of BlackRock’s digital asset strategy,” BlackRock said in its announcement. BUIDL will enable investors to issue and trade assets via blockchain technology, providing them with more access to on-chain products “instantaneous and transparent settlement,” and transfers across different platforms, the company said.

$1 Per Token Value

BUIDL will invest all its assets in cash, U.S. Treasurys, and repurchase agreements, and enable investors to generate yield while possessing the token on the blockchain. Investors will be able to transfer tokens all day, every day of the year to other pre-approved investors, BlackRock said. 

The fund will maintain a $1 per token value and pay daily accrued dividends to investor cryptocurrency wallets every month.

BlackRock Financial Management will serve as BUIDL’s investment manager, while Bank of New York Mellon will be custodian of the fund’s s assets and its administrator. Securitize will manage the tokenized shares and report on fund subscriptions, redemptions, and distributions. 

Securitize will act as a transfer agent and tokenization platform, managing the tokenized shares and reporting on fund subscriptions, redemptions, and distributions.

“Today’s news demonstrates that traditional financial products are being made more accessible through digitization,” said Securitize co-founder and CEO Carlos Domingo.

Earlier this year, BlackRock and nine other companies won SEC approval for spot bitcoin ETFs, ending a decade-long saga of rejections for these products. It is currently awaiting the SEC’s approval along with other financial powerhouses on a spot Ethereum ETF.