A press release entitled, "BlackRock Launches Its First Tokenized Fund, BUIDL, on the Ethereum Network," explains, "BlackRock unveil[ed] its first tokenized fund issued on a public blockchain, the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). BUIDL will provide qualified investors with the opportunity to earn U.S. dollar yields by subscribing to the Fund through Securitize Markets, LLC." BlackRock's Head of Digital Assets Robert Mitchnick comments, "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." (See the filing for BUIDL, which is domiciled in the British Virgin Islands, here.) (Note: We look forward to seeing those of you attending our Bond Fund Symposium Monday in Philadelphia! Attendees and Crane Data subscribers may access the conference binder, Powerpoints and recordings (after the show) via our "Bond Fund Symposium 2024 Download Center.")
The release tells us, "Tokenization remains a key focus of BlackRock's digital asset strategy. Through the tokenization of the Fund, BUIDL will offer investors important benefits by enabling the issuance and trading of ownership on a blockchain, expanding investor access to on-chain offerings, providing instantaneous and transparent settlement, and allowing for transfers across platforms. BNY Mellon will enable interoperability for the Fund between digital and traditional markets."
Securitize co-founder and CEO Carlos Domingo says, "Tokenization of securities could fundamentally transform capital markets. Today's news demonstrates that traditional financial products are being made more accessible through digitization. Securitize is proud to be BlackRock's transfer agent, tokenization platform and placement agent of choice in digitizing and expanding access to its investment products."
BlackRock states, "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. The Fund invests 100% of its total assets in cash, U.S. Treasury bills, and repurchase agreements, allowing investors to earn yield while holding the token on the blockchain. Investors can transfer their tokens 24/7/365 to other pre-approved investors. Fund participants will also have flexible custody options allowing them to choose how to hold their tokens. The initial ecosystem participants in BUIDL include Anchorage Digital Bank NA, BitGo, Coinbase, and Fireblocks, among other market participants and infrastructure providers in the crypto industry."
They add, "BlackRock Financial Management, Inc., will be the investment manager of the Fund and Bank of New York Mellon will serve as the custodian of the Fund's assets and its administrator. Securitize will act as a transfer agent and tokenization platform, managing the tokenized shares and reporting on Fund subscriptions, redemptions, and distributions. Securitize Markets will act as placement agent, making the Fund available to eligible investors. PricewaterhouseCoopers LLP has been appointed as the Fund's auditor for the period ending December 31, 2024."
Finally, the release states, "The Fund will issue shares pursuant to Rule 506(c) under the Securities Act of 1933 and Section3(c)(7) of the Investment Company Act. The Fund's initial investment minimum is $5 million. BlackRock has also made a strategic investment in Securitize. As part of the investment, Joseph Chalom, BlackRock's Global Head of Strategic Ecosystem Partnerships, has been appointed to Securitize's Board of Directors."
The Wall Street Journal comments on the news in, "BlackRock Launches First Tokenized Fund on Ethereum Blockchain." They write, "BlackRock said Wednesday that it has partnered with digital-assets specialist Securitize Markets to launch a tokenized money market fund on the Ethereum blockchain. The private fund, called BlackRock USD Institutional Digital Liquidity Fund, is BlackRock's first tokenized fund on a public blockchain. It follows the asset manager's successful launch of a bitcoin exchange-traded fund, which has seen about $13 billion in inflows since January."
The piece explains, "This is how the fund works: Qualified purchasers -- in this case, generally institutions with at least $25 million in investable assets -- who create a digital wallet and sign up with Securitize will be able to invest in the fund. The minimum investment for those institutions is $5 million. Investors will then receive a token that has a stable price of $1 and accrue interest in the form of the token. Investors will be able to transfer the tokens from wallet to wallet on the blockchain."
It adds, "Both traditional financial firms and crypto players have launched similar products to explore how tokenization could bring more transparency in financial markets. Asset manager Franklin Templeton has a tokenized money-market fund, while crypto startup Ondo Finance offers a tokenized version of the iShares Short Treasury Bond ETF. Securitize also works with private equity firms KKR and Hamilton Lane for tokenized funds."
