BlackRock's Tokenized Fund Set To Bring Legitimacy To Ethereum And Other Blockchains Seen As ''Retail Casinos,'' Bernstein Says

BlackRock’s Tokenized Fund Set To Bring Legitimacy To Ethereum And Other Blockchains Seen As ”Retail Casinos,” Bernstein Says

ByLockridge Okoth

Updated: 27 March 2024

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BlackRock’s plan for its first tokenized fund will help to bring “legitimacy” to Ethereum and other public smart chains that so far have been seen ”as retail casinos,” says brokerage firm Bernstein.

Analysts Gautam Chhugani and Mahika Sapra said in a Mar. 26 note that the fund management titan’s planned USD Institutional Digital Liquidity Fund will encourage ”more traditional institutional customers to adopt on-chain funds,” and thus drive institutional utility for Ethereum and other public blockchains.

BlackRock’s tokenized fund marks an effort to venture deeper into the cryptocurrency industry after the fund manager launched a spot Bitcoin ETF (exchange-traded fund (ETF) in January.

🔴 #Bernstein: @BlackRock's tokenized fund brings legitimacy to public blockchains.

✅ The analysts said that tokenized funds could also become a new growth category for asset managers, evolving from simple ETF investing to creating "on-chain" products. #BlackRock #Securitize pic.twitter.com/IlrhZbeK4V

— Dvizh 🇺🇦 (@dvizh_com) March 27, 2024

BlackRock Bringing Crypto And TradFi Together

The analysts said that while tokenized funds are not new, BlackRock’s offering is unique as it brings together players from both the traditional financial industry and the crypto sector.

BlackRock is using Securitize as the tokenization platform for the fund. Other crypto players like Coinbase, BitGo, and Fireblocks were named as custodians, and settlement partners for the fund’s digital assets.

BNY Mellon will promote the interoperability of the fund with traditional markets as a custodian for the fund’s assets.

This model will “facilitate interoperability between both sides and would comfort more traditional customers to adopt on-chain funds, without major friction points,” the Bernstein analysts said.

BlackRock’s fund also acts as a major test case for institutions to leverage instant, transparent and efficient blockchain settlements at reduced costs, it added.