After leaving financial and cryptocurrency market watchers to read the tea leaves to predict the next big move, investment giant BlackRock spilled the tea on its tokenized asset fund late Wednesday. The fund, called ‘BUIDL’, will be built on the Ethereum network and is the company’s first tokenized fund issued on a public blockchain.
The BlackRock USD Institutional Digital Liquidity Fund was first registered in the British Virgin Islands last year.
“BUIDL brings significant benefits to investors by enabling ownership issuance and trading on blockchains, expanding investors’ access to on-chain products, providing instant and transparent payments, and allowing cross-platform transfers,” BlackRock said in the announcement. “We will provide it,” he said.
BlackRock said the fund’s initial investment minimum is $5 million. This is a much higher bar than stated in the SEC filing released yesterday. The securities exemption announcement does not specify the size of the fund, but does state that the minimum investment allowed from outside investors is $100,000. Investor application values ranged from $1 to $100 million.
To connect Ethereum with traditional markets, BlackRock is collaborating with Bank of New York Mellon, a global investment management and investment services provider. BNY Mellon will act as custodian and manager of the fund’s assets.
BlackRock also utilizes Securitize Markets, LLC, a transfer agent registered with the SEC.
“Tokenization of securities can fundamentally transform capital markets,” Carlos Domingo, co-founder and CEO of Securitize, said in the release. “Today’s news shows that traditional financial products are becoming more accessible through digitization.”
As part of the transaction, BlackRock made a strategic investment in Securitize and Joseph Chalom, BlackRock’s Global Head of Strategic Ecosystem Partnerships, was appointed to Securitize’s Board of Directors.
Following the explosive success of the spot Bitcoin ETF approved by the SEC in January, cryptocurrency market watchers were eagerly anticipating the approval of a similar investment vehicle for Ethereum. Analysts say these developments could push the price of ETH to $14,000. As of this writing, it is trading at $3,519.
Not everyone is so optimistic. Analyst Eric Balchunas said An Ethereum spot ETF would be “small potatoes” next to Bitcoin-based ETFs. Nonetheless, when BlackRock CEO Larry Fink was asked about a spot Ethereum ETF in January, he likely telegraphed his BUIDL plan.
“I see the value in owning an Ethereum ETF,” Fink told CNBC at the time. “As I said, this is just a stepping stone towards tokenization.”
However, the outlook for spot Ethereum ETFs is less clear. The SEC has withheld a decision on BlackRock and Grayscale’s applications to offer ETFs. And with a May deadline looming, some experts say approval may not come through and it’s probably best to delay.
ETH price surged in November due to BlackRock’s spot Ethereum submission.
This is a developing story and will be updated as information becomes available.