BlackRock is about to launch a tokenized fund, the BlackRock USD Institutional Digital Liquidity Fund. According to an SEC filing, it has partnered with tokenization firm Securitize. Update: BlackRock has now shared additional information about the new fund.
The filing didn’t disclose the size of the Cayman Islands fund, but the minimum investment amount is $100,000.
CEO Larry Fink has previously been very optimistic about tokenization.
In addition, the spot Bitcoin ETF IBIT launched about ten weeks ago now has assets under management of more than $15 billion. Only two other ETFs have had higher inflows this year: the S&P 500 funds from Vanguard and BlackRock’s iShares. Each of them has assets under management (AUM) of more than $400 billion.
BlackRock is also the manager of Circle’s reserve fund which underpins the USDC stablecoin. So just between IBIT and the Circle fund, the crypto sector accounts for more than $40 billion in BlackRock assets. That said, BlackRock has more than $9 trillion AUM.
The role of Securitize – multi asset class collateral?
Securitize has been pushing hard to achieve this. It grabbed headlines when it tokenized a KKR fund on the Avalanche public blockchain in 2022. However, Securitize was taking the initiative by creating a feeder fund as part of Securitize Capital and tokenizing it. In this case, BlackRock is issuing a digitally native fund using Securitize’s infrastructure.
For context, it’s worth noting that Securitize is launching a lending solution. One of the key potential benefits of tokenization is the ability to move around collateral and mix and match between asset classes. Potentially investors could pledge their crypto to Securitize as collateral to invest in this sort of fund.
Yesterday saw the launch of Libre, a fund distribution protocol backed by Nomura’s Laser Digital and Alan Howard’s Webn. It is also looking to use BlackRock Treasury ETFs precisely to provide digital liquidity on chain. If switching between funds, rather than moving funds off chain, it’s easier to park them in an on-chain money market fund.
Meanwhile, the price of the Ondo Finance token shot up from around 40¢ to 56¢. Ondo is the public blockchain protocol that tokenizes BlackRock funds. On the one hand, this looks like competition, although Ondo does not target US investors.
