According to a previous report by Zombit, BlackRock, the world’s largest fund management company, 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 also distribute dividends monthly, 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 “brings legitimacy to Ethereum.” In the past, Ethereum and other blockchains were seen solely as a playground for retail investors. However, over time, this channel, originally built for retail speculation, has also started to drive institutional-level utility.
Analysts point 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, compared to private chains, using public blockchains like Ethereum can bring more advantages to products, the analysts said.
The report further notes that BlackRock’s move will encourage more traditional institutional clients to deploy funds on the blockchain. Fund deployment on the blockchain may develop into a new growth category for asset managers.
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