According to CoinDesk, BlackRock and Securitize have joined forces to establish a digital assets fund, a move that could have significant implications for regulated, compliant tokenization markets in the United States. The BlackRock USD Institutional Digital Liquidity Fund (BUIDL) will be listed on Securitize's platform and is expected to attract institutional capital and serious money managers to the Securitize ecosystem. BUIDL will hold all its assets in cash, U.S. Treasury bills, and repurchase agreements, making it a digital money market product.
Securitize has previously acted as the transfer agent and issuance platform for Arca's US Treasury Fund (RCOIN). While Arca pioneered the blockchain-based structure for a traditionally ultra-liquid fund in 2020, BlackRock's involvement could provide the impetus this vision needs. According to data from Security Token Market, lifetime Alternative Trading System volumes for tokenized assets reached over $110 million by March 2024. BlackRock's $100 million seed funding for BUIDL makes it the largest asset on Securitize, with Week 1 inflows of approximately $175 million already positioning BUIDL as the second-largest product in the money market cohort with $275 million in AUM, behind Franklin Templeton's $360+ million money market fund.
The fund is initially limited to Qualified Purchasers in the primary markets, but an eventual secondary market listing could provide more attractive trading conditions to incentivize investors. BUIDL is expected to be a sticky asset, allowing investors to collect yield while evaluating other listed alternative investments on Securitize's platform. As detailed in the State of Security Tokens report series by Security Token Advisors, money markets and treasuries are the low-hanging fruit for asset managers to familiarize themselves with tokenization technology and the landscape. Other major money managers may view BlackRock's liquidity fund as the gold standard for parking capital and getting their teams up to speed with on-chain finance.
On March 27, 2024, Ondo Finance reallocated $95 million of its own tokenized short-term bond fund to BUIDL. As fiduciaries onboard with Securitize for access to BUIDL, they are likely to move significant capital into the fund and the Securitize ecosystem. This could lead to an increase in capital flows and activity for alternative investment products and listings on Securitize Markets' primary and secondary trading venues, setting a precedent for other broker-dealers, alternative trading systems, and comparable regulated venues in their issuer structuring and strategies.