BlackRock launches Blockchain Based Share Class
BlackRock, one of the world's largest asset management firms, has introduced a blockchain-based share class for its $150 billion Treasury Trust Fund. The move reflects BlackRock's growing interest in blockchain technology, but it is worth noting that cryptocurrencies will not be used in this new model. Blockchain will only be used for recordkeeping and ownership tracking, improving transaction speed and improving audit trails.
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Let's understand what this move by BlackRock means and how it can be an important step towards changing the traditional financial system.
Using blockchain, but not crypto
BlackRock's new move is an attempt to leverage the advantages of blockchain technology while changing traditional fund operations. In this model, investors will buy digital shares that will be recorded on the blockchain, but these shares will not involve any cryptocurrency. Instead, blockchain will only be used for backend record keeping, thereby maintaining stability and liquidity in traditional treasury instruments.
Partnership with BNY Mellon
BlackRock has partnered with BNY Mellon to implement this blockchain-based share class. BNY Mellon, a leading bank in the world, will do the recordkeeping in collaboration with a third-party blockchain platform. However, these digital shares will not be operated on the public blockchain network, but through a centralized backend, so there will be no change in the traditional process.
Designed specifically for institutional investors
This new model of BlackRock is primarily for institutional investors. It has a minimum investment limit of $3 million and does not include crypto custody or trading. This investment is only for institutions available in the US and does not include retail investors. This move by BlackRock is an important step towards establishing the role of blockchain as a major player in the institutional finance sector.
Tokenization: The Beginning of Future Structural Change
BlackRock CEO Larry Fink made it clear in his recent shareholder letter that tokenization is a structural change that will play an important role in the current financial market. According to him, if the US does not solve its growing public debt problem, it could open the way for decentralized digital assets like Bitcoin. BlackRock has already invested more than $1.7 billion in the BUIDL fund and is now taking new steps to advance its tokenization strategy.
Regulatory Approval of Blockchain-Backed Recordkeeping
The most important thing about this move is that the Securities and Exchange Commission (SEC) has approved this new digital share class of BlackRock without any additional crypto monitoring. This means that blockchain-backed recordkeeping has received regulatory approval, signaling the possible expansion of tokenization within the traditional financial system in the future.