According to a previous report by Zombit, BlackRock, the world’s largest asset 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 returns 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 “brings legitimacy to Ethereum.” In the past, Ethereum and other blockchains were only seen as a gambling ground for retail investors. However, over time, this pipeline built for retail speculation has also begun 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, bringing benefits such as increased transparency, capital efficiency, and 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 states that BlackRock’s move 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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