According to a previous report by Zombit, BlackRock, the world’s largest asset management company, announced its first tokenized fund. The fund, called “BlackRock USD Institutional Digital Liquidity Fund” (BUIDL), will invest 100% of its assets in cash, US government bonds, and repurchase agreements. It will also distribute dividends monthly, allowing investors to earn income while holding tokens on the blockchain.
Analysts Gautam Chhugani and Mahika Sapra from AllianceBernstein stated in a report published on Tuesday that BlackRock’s latest move “legitimizes Ethereum.” In the past, Ethereum and other blockchains were only seen as a gambling ground for retail investors. However, over time, this channel originally built for retail speculation has also started to drive institutional-level utility.
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, compared to private chains, using public blockchains like Ethereum can bring more advantages to products, the analysts said.
The report further stated that BlackRock’s action will encourage more traditional institutional clients to deploy funds on the blockchain. Blockchain-based funds may develop into a new growth category for asset managers.
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