BlackRock Shifts Focus to RWA with Planned Ethereum Tokenized Asset Fund

The famous institutional asset management firm, BlackRock, continues its exploration into the realm of digital assets, unveiling plans for a new tokenized asset fund on the Ethereum blockchain.

On March 19, BlackRock announced its collaboration with digital asset tokenization specialist Securitize to introduce the “BlackRock USD Institutional Digital Liquidity Fund,” as disclosed in a filing to the US Securities and Exchange Commission. However, specific details regarding the fund’s total size were not disclosed.

Galaxy CEO Mike Novogratz expressed optimism for Ethereum following the news, stating, “It feels very good for Ethereum,” on March 20.

This feels very important for $Eth!!! https://t.co/UJVnIhm5pJ

— Mike Novogratz (@novogratz) March 19, 2024

BlackRock’s venture into real-world asset (RWA) tokenization marks a significant move in the industry. The fund, trading under the ticker BUIDL, will operate on the Ethereum blockchain. The Ethereum address hosting the fund witnessed its inaugural transfer approximately two weeks ago, housing 100 BUIDL tokens and having one holder.

Securitize, BlackRock’s RWA tokenization partner, is already collaborating with industry leaders such as KKR and Hamilton Lane on tokenized funds, as reported by Bloomberg. However, the newly introduced product is exclusively available to institutional investors, with a minimum investment threshold of $100,000.

RWA tokenization involves the process of transferring traditional assets like gold, commodities, treasuries, and real estate onto the blockchain. Anticipated to burgeon into a multi-trillion-dollar industry over the next decade, Wall Street is eager to seize opportunities within this sector. Major financial institutions including JPMorgan, Citi, and Bank of America are actively exploring RWA tokenization.

Private wealth management firm Bernstein estimates that approximately 2% of the global money supply, amounting to roughly $3 trillion, could be tokenized on the blockchain within the next five years. Additionally, Citigroup forecasts the tokenization market could expand to $5 trillion by 2030.

In parallel, the news of the fund coincides with speculation regarding the approval of a spot Ethereum ETF by the SEC in May. However, analysts have been revising down the likelihood of approval due to the regulator’s disengagement from fund issuers and potential complications arising from staking.

BlackRock, among other fund managers, has submitted applications for a spot ETH ETF following the success of its Bitcoin product. Despite this, Ethereum prices exhibited no significant reaction to the news, experiencing a further 5.8% decline on the day to reach $3,150 during early Asian trading on Wednesday.

Although ETH made a great recovery to trade above $3,500 at the time of writing, the crypto market correction appears poised to deepen. Ethereum has retraced 21% from its 2024 peak of $4,070 on March 12 and remains  nearly 30% lower than its late 2021 peak price.

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