After financial and crypto market watchers divined the next big move by reading the tea leaves, investment titan BlackRock spilled the tea on a tokenized asset fund late Wednesday. Dubbed ‘BUIDL', it will be built on the Ethereum network and is the company's first tokenized fund issued on the public blockchain.
The BlackRock USD Institutional Digital Liquidity Fund was registered in the British Virgin Islands last year.
“BUIDL offers investors valuable benefits by enabling ownership on the blockchain, expanding investors' access to the supply chain, providing fast and transparent settlement, and allowing transactions across platforms,” BlackRock said in the announcement.
BlackRock's minimum initial investment of the fund is $5 million. That's a much higher bar than the SEC filing published yesterday. The announcement of the free offering of securities did not specify the size of the fund, but said the minimum investment it would receive from any foreign investors would be $100,000. Investors' applications ranged in value from $1 to $100 million.
To bridge the gap between Ethereum and traditional markets, BlackRock is enlisting Bank of New York Mellon, a global provider of investment management and investment services. BNY Mellon serves as the custodian and administrator of the fund's assets
BlackRock Securities Markets, LLC, is acting as an SEC registered transfer agent.
“Securities tokenization can fundamentally change the capital markets,” said Carlos Domingo, co-founder and CEO of Securities, in the announcement. “Today's news shows that traditional financial products are being made more accessible through digitization.”
As part of the deal, BlackRock made a strategic investment in Securities, and Joseph Chalom, BlackRock's head of global strategic ecosystem partnerships, was appointed to Securities' board of directors.
After the explosive success of spot Bitcoin ETFs approved by the SEC in January, crypto market watchers have been eagerly anticipating the approval of a similar investment vehicle for Ethereum. Such a development, according to analysts, could push the price of ETH to $14,000. As of this writing, it is trading at $3,519.
Not everyone is like a bully. According to analyst Eric Balchunas, the Ethereum Spot ETF will be “small potatoes” next to its Bitcoin-based peers. However, BlackRock CEO Larry Fink may have telegraphed the BUIDL plan when asked about a spot Ethereum ETF in January.
“I see value in having an Ethereum ETF,” Fink told CNBC at the time. “As I said, these are the stones that go to tokenism.”
The prospects for the spot Ethereum ETF, however, are less clear. The SEC has delayed its decision on applications from BlackRock and Grayscale to offer such an ETF. And with a tough deadline looming in May, some experts say approval may not come — and a delay is probably for the best.
BlackRock's spot Ethereum filing boosted ETH prices in November.
This is a developing story and will be updated as information becomes available.
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