BLACKROCK, INC. 
(MT Newswires) -- BlackRock is launching its first tokenised fund, marking a significant step in the innovation of financial services through blockchain technology. The fund aims to transform capital markets by making transactions more efficient, with instant settlements and a reduction in manual processes.
The fund, which has already raised $280 million, is designed for crypto institutions looking to manage cash or develop derivatives and collateral management products on blockchain. Managed by BlackRock, the world's largest asset manager, the fund operates entirely on blockchain, offering native and tokenised cash management.
It is a money market fund investing in short-term treasury bills and repurchase agreements. Investors receive tokens corresponding to the initial value of their investment, and the interest generated is distributed in the form of additional tokens directly into their blockchain portfolio. These tokens can then be converted into cash.
The Ethereum blockchain was chosen for this fund because of its ability to issue new tokens and to use smart contracts, features that are not available on the Bitcoin blockchain. Ethereum is favoured for the development of financial products because of its flexibility and potential for innovation.
Although banks are limited by stricter regulations, such as those of the OCC, and cannot use public blockchains, SEC-regulated asset managers and transfer agents, such as BlackRock, have greater freedom to exploit these technologies. The general trend is towards public blockchains, which are seen as the breeding ground for future innovation, much like the evolution of the public internet.
Regulation, particularly the SEC's focus on Ethereum and other crypto-assets, could influence the evolution of this fund. However, the industry is ready to adapt to legal frameworks to continue to operate effectively in the digital capital ecosystem.
