Raising over $240 million in a week, BlackRock's tokenized fund is "really fragrant"

Zhitong
2024.03.28 03:40
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BlackRock's tokenized fund BUIDL has attracted over $240 million in funding. The fund invests in cash, US Treasury securities, and repurchase agreements, and issues a cryptocurrency called BUIDL. BlackRock is one of the largest advocates for cryptocurrencies among mainstream financial companies, with its iShares Bitcoin Trust Fund attracting over $13 billion in inflows. The fund primarily serves cryptocurrency companies, Treasury derivatives projects, and the stablecoin market. BlackRock's BUIDL fund has attracted investments from crypto startups like Ondo Finance

According to the Zhitong Finance APP, since its first appearance a week ago, BlackRock's tokenized fund BlackRock USD Institutional Digital Liquidity Fund (BUIDL) has attracted over $240 million in funds. The fund invests in cash, US Treasury bonds, and repurchase agreements, and holders receive a cryptocurrency called BUIDL, with each token valued at $1. BlackRock's partner Securitize's digital wallet can transfer tokens to other verified addresses.

BlackRock has been one of the largest advocates for cryptocurrency among mainstream financial companies, with Chairman and CEO Larry Fink stating that every financial asset will eventually be tokenized. The company's iShares Bitcoin Trust Fund, launched in January this year, has attracted over $13 billion in inflows.

Carlos Domingo, founder and CEO of Securitize, stated that tokenized funds primarily serve three use cases. The fund targets crypto companies seeking to manage their funds on the blockchain. Secondly, such funds can serve as underlying assets for crypto projects focusing on Treasury bond derivatives. Lastly, the product serves as an alternative to stablecoins, which can be used as collateral for lending and trading.

Domingo said: "This is a very institutionalized fund managed by the world's largest asset management company." "There is no counterparty risk for any cryptocurrency company."

Nathan Allman, founder of crypto startup Ondo Finance, stated that Ondo Finance has invested $95 million in BlackRock's BUIDL fund. Franklin Dampson launched the first tokenized money market fund registered in the US in 2021, with assets under management of around $324 million as of the end of February. However, the token representing shares in the Franklin Dampson fund, BENJI, cannot be transferred among fund investors.

Domingo stated that its subsidiary is a registered transfer agent with the US Securities and Exchange Commission (SEC), allowing its clients to transfer tokens among each other. However, he pointed out that the SEC has not issued any guidance on whether companies must use private or public blockchains for tokenization.

The SEC has recently increased scrutiny of the Ethereum blockchain. BlackRock's fund utilizes this network for processing transactions. Domingo stated that the investigation takes time and should be separated from the blockchain itself.

He said: "The public Ethereum blockchain is a proven infrastructure, well-suited for executing our trading activities."

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