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Tuesday, May 28, 2024

BlackRock Pivots to RWA, With Planned Ethereum Tokenized Asset Fund

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On March 19, BlackRock revealed that it is preparing to offer a fund through a partnership with digital asset tokenization specialist Securitize.

According to a filing to the US Securities and Exchange Commission, the Wall Street giant plans to launch the “BlackRock USD Institutional Digital Liquidity Fund.” However, the total size of the fund was not disclosed.

It feels very good for Ethereum, commented Galaxy CEO Mike Novogratz on March 20.

BackRock Pivot to RWA

The fund will be based on the Ethereum blockchain and will trade under the ticker BUIDL. The Ethereum address hosting it had its first transfer around two weeks ago, according to Etherscan. It contains 100 BUIDL tokens and has one holder.

BlackRock’s real-world asset (RWA) tokenization partner, Securitize, is already working with KKR, Hamilton Lane, and others on tokenized funds, reported Bloomberg.

However, the new product is only available to institutional investors, with the minimum investment accepted set at $100,000.

RWA tokenization is a process of putting traditional assets such as gold, commodities, treasuries, and real estate on the blockchain. It has been predicted to become a multi-trillion-dollar industry over the next decade, and Wall Street wants in on the action.

Big banks such as JPMorgan, Citi, and Bank of America are all experimenting with RWA tokenization.

Private wealth management firm Bernstein has estimated that around 2% of the global money supply, roughly $3 trillion, could be tokenized on the blockchain over the next five years. Additionally, Citigroup has estimated the tokenization market could swell to $5 trillion by 2030.

ETH Price in Retreat

Moreover, the news of the fund comes amid hopes that a spot Ethereum ETF may be approved by the SEC in May. However, analysts have been lowering their odds of approval since the regulator has disengaged from fund issuers, and staking complications could arise.

BlackRock is among the fund managers that have applied for a spot ETH ETF following the approval and success of its Bitcoin product.

Ethereum prices did not react to the news and retreated a further 5.8% on the day, falling to $3,150 during early Asian trading on Wednesday.

ETH had recovered marginally to trade just above $3,200 at the time of writing, but the crypto correction looks set to deepen.

Ethereum has fallen 21% from its 2024 high of $4,070 on March 12 and remains 34% down from its peak price in late 2021.

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