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After leaving financial and crypto market watchers reading the tea leaves to predict the next big move, investment giant BlackRock announced late Wednesday that its tokenized asset fund would spilled. The fund, called BUIDL, will be built on the Ethereum network and will be 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 enables the issuance and trading of ownership on the blockchain, expands investor access to on-chain products, provides instant and transparent payments, and enables cross-platform remittances. “By doing so, we offer significant benefits to investors,” BlackRock said in the announcement.
BlackRock said the fund’s minimum initial investment is $5 million. This is a significantly higher standard than specified in the SEC filing released yesterday. The notice of tax-free offering of securities did not specify the size of the fund, but said the minimum investment amount accepted from outside investors would be $100,000. Investor application amounts ranged from $1 to $100 million.
To create a bridge between Ethereum and traditional markets, BlackRock has enlisted Bank of New York Mellon, a global provider of investment management and investment services. BNY Mellon acts as custodian and administrator of the Fund’s assets.
BlackRock also uses Securitize Markets, LLC, an SEC registered transfer agent.
“Tokenization of securities has the potential to fundamentally change capital markets,” Securitize co-founder and CEO Carlos Domingo said in the announcement. “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, which was approved by the SEC in January, crypto market watchers were eagerly anticipating the approval of a similar investment vehicle for Ethereum. Analysts say these developments could push ETH price to $14,000. As of this writing, it is trading at $3,519.
Not everyone is equally bullish.Analyst Eric Balchunas Said Ethereum spot ETFs will be “small potatoes” compared to Bitcoin-based ETFs. Still, when BlackRock CEO Larry Fink was asked about the Spot Ethereum ETF in January, he may have telegraphed his plans for BUIDL.
“I think there is value in having an Ethereum ETF,” Fink told CNBC at the time. “As I said, these are just stepping stones to tokenization.”
However, the outlook for Spot Ethereum ETFs is less clear. The SEC deferred a decision on applications from BlackRock and Grayscale to offer such ETFs. With a tight May deadline looming, some experts say approval may not be forthcoming and a delay is probably the best course of action.
BlackRock’s spot Ethereum application caused a spike in ETH prices in November.
This is a developing story and will be updated as information becomes available.
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