BlackRock and Securitize's partnership to develop a digital assets fund affects US regulated tokenization marketplaces. BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) is not the first to list on Securitize, but it may be the product that attracts institutional capital and serious money managers.
As a digital money market product, (BUIDL) will hold 100% cash, U.S. Treasury bills, and repos. Arca's US Treasury Fund (RCOIN) was and is transferred and issued by Securitize. In 2020, Arca pioneered the blockchain-based structure for a historically ultra-liquid fund, but BlackRock's positioning may ignite this concept.
STM.co data shows lifetime Alternative Trading System (ATS) volumes for tokenized assets surpassed $110+ million until March 2024. BlackRock's $100 million BUIDL initial funding makes it Securitize's largest asset, and Week 1 inflows of $175 million make it the second-largest money market product in the cohort with $275 million in AUM behind Franklin Templeton's $360+ million fund.
While limited to Qualified Purchasers (QPs) in primary markets (an estimated 2.7 million households with $5 million or more in investable assets or investment managers & corporations with $25 million), spillover to a secondary market listing will encourage investors with better trading conditions
BUIDL will be a sticky asset that lets investors collect yield while analyzing Securitize's listed KKR and Hamilton Lane funds and assembling portfolios without leaving the platform.
Security Token Advisors' 2023 State of Security Tokens study series shows asset managers that money markets and treasuries are the easiest place to learn about tokenization technologies, partners, and the landscape. Blue-chip money managers will view BlackRock's liquidity fund as the gold standard for parking cash and training their teams on on-chain finance.
On March 27, 2024, Ondo Finance transferred $95 million from its tokenized short-term bond fund to BUIDL. Fiduciaries who join Securitize for BUIDL access will invest heavily in the fund and ecosystem.
Alternative investment products and listings on Securitize Markets' primary and secondary trading venues may experience increased capital flows and activity. This will inspire issuer structuring and techniques by other broker-dealers, alternative trading systems, and regulated venues.
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