According to a previous report by Zombit, BlackRock, the world’s largest fund management company, has announced its first tokenized fund. The fund, named “BlackRock USD Institutional Digital Liquidity Fund” (BUIDL), will invest 100% of its assets in cash, US Treasury bonds, and repurchase agreements. It will distribute dividends on a monthly basis, allowing investors to earn profits while holding tokens on the blockchain.
Analysts Gautam Chhugani and Mahika Sapra from AllianceBernstein stated in a report released on Tuesday that BlackRock’s latest move “legitimizes Ethereum.” Previously, Ethereum and other blockchains were only seen as a gambling platform for retail investors. However, over time, this channel originally built for retail speculation has also started to drive institutional-level practicality.
The analysts pointed out that this is the first major test case for financial institutions to experience 24/7 real-time settlement on the blockchain. The benefits it brings include higher transparency and capital efficiency, as well as lower costs. In addition, using public blockchains like Ethereum can bring more advantages to products compared to private chains, the analysts said.
The report further notes that BlackRock’s move will encourage more traditional institutional clients to deploy funds on the blockchain. Blockchain-based funds may therefore develop into a new growth category for asset managers.
