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After leaving financial and crypto market watchers reading tea leaves to divine its next big move, investment titan BlackRock spilled the tea late Wednesday on its tokenized asset fund. Dubbed ‘BUIDL,’ it 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 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,” BlackRock said in its announcement.
The fund’s initial investment minimum is $5 million, BlackRock said. That's a significantly higher bar than what was specified in its SEC filing, published yesterday. The Notice of Exempt Offering of Securities did not specify the fund size but said the minimum investment accepted from any outside investor would be $100,000. Investor application values ranged from $1 to $100 million.
In order to bridge between Ethereum and traditional markets, BlackRock is enlisting Bank of New York Mellon, a global provider of investment management and investment services. BNY Mellon will serve as the custodian of the Fund’s assets and its administrator
BlackRock is also tapping Securitize Markets, LLC, an SEC registered transfer agent.
“Tokenization of securities could fundamentally transform capital markets,” Securitize co-founder and CEO Carlos Domingo said in the announcement. ”Today’s news demonstrates that traditional financial products are being made more accessible through digitization.”
As part of the deal, BlackRock made a strategic investment in Securitize, and BlackRock global head of strategic ecosystem partnerships Joseph Chalom has been appointed to the Securitize board of directors.
After the explosive success of spot Bitcoin ETFs, approved by the SEC in January, crypto market watchers were eagerly anticipating the approval a similar investment vehicle for Ethereum. Such a development, analysts say, could push the price of ETH to $14,000. It's trading for $3,519 as of this writing.
Not everyone is as bullish. Analyst Eric Balchunas said that Ethereum spot ETF would be “small potatoes” next to their Bitcoin-based counterparts. Even so, BlackRock CEO Larry Fink may have telegraphed the plan for BUIDL 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 just stepping stones towards tokenization.”
The prospects of a spot Ethereum ETF have been less clear, however. The SEC has pushed back its decision on applications to offer such an ETF from BlackRock and Grayscale. And while there is a hard deadline coming in May, some experts say approval may not come—and that a delay is probably for the best.
BlackRock's spot Ethereum filing prompted a surge in the price of ETH in November.
This is a developing story and will be updated as information becomes available.