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Tokenization firm Securitize just closed a $47 million strategic funding round led by none other than BlackRock, the world’s largest asset manager and operator of the most popular spot Bitcoin ETF in the United States.
So far, the firm’s efforts to offer the compliant trading of securities on-chain have established itself as a leader in the United States, based on the size of BlackRock’s tokenized dollar fund—created with Securitize—compared to competitors.
With the funding round’s proceeds, the Miami-based firm said it will seek to accelerate product development and expand its global footprint. In an interview, Securitize CEO Carlos Domingo told Decrypt that approval to “basically launch in Europe” under the EU’s DLT Pilot Regime is next.
“For years, we've been grinding and working on our tech stack, getting all our licenses, and being regulatory compliant,” he said. “The fact that this has led to work with the largest asset manager in the world, issuing the largest tokenized fund in history, [...] is a super big accomplishment.”
The investment comes as BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL), attracts notable involvement from financial institutions. Since the fund debuted in March, it’s grown to $375 million in assets under management, according to Dune Analytics dashboard.
At the time of writing, the BUIDL fund has an $8 million lead on Franklin Templeton’s FOBXX, an on-chain dollar fund built using the Ethereum scaling network Polygon and layer-1 blockchain Stellar.
Through its work with Securitize, however, BlackRock’s BUIDL fund lives on Ethereum itself. Investments in BlackRock’s fund are represented by Ethereum-based BUIDL tokens, which are pegged to $1 and backed by U.S. Treasuries and repo agreements. Holders receive a yield for investing in the fund in the form of more BUIDL tokens.
Though the strategic funding round saw participation from a few publicly traded TradFi firms, including Hamilton Lane and Tradeweb Markets, several crypto natives were also in the mix. That included participation from stablecoin issuers Paxos and Circle, as well as Aptos Labs, creator of the layer-1 blockchain Aptos.
In late 2022, BlackRock CEO Larry Fink described tokenization as the “next generation for markets,” citing benefits like “reduced fees” and “instantaneous settlement.”
Since its approval in January, BlackRock’s spot Bitcoin ETF has amassed 274,000 Bitcoin, worth $16.5 billion today. As of Wednesday, that put the ETF just $1.5 billion behind Grayscale’s Bitcoin Trust, the incumbent leader in offering investors Bitcoin exposure through similar means.
As part of the investment, BlackRock’s Global Head of Strategic Ecosystem Partnerships, Joseph Chalom, has been appointed to Securitize’s board of directors.
“At BlackRock, we believe that tokenization has the potential to drive a significant transformation in capital markets infrastructure,” he said. “Our investment in Securitize is another step in the evolution of our digital assets strategy.”
Edited by Andrew Hayward