Benzinga - BlackRock Inc., the world's largest asset manager, has deployed $100 million onto Ethereum anticipating the approval of BlackRock's new Digital Liquidity Fund. CEO Larry Fink believes tokenization and exchange-traded funds (ETFs) will revolutionize finance, and many experts believe the tokenization market could reach $10 trillion in 2030.
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According to a March 19 filing with the Securities and Exchange Commission (SEC), BlackRock launched a new initiative — The BlackRock USD Institutional Digital Liquidity Fund. The fund was incorporated in the British Virgin Islands in partnership with Securitize, a San Francisco-based asset tokenization company. BlackRock is gearing up for something big as a wallet on Ethereum linked to the company has been identified and holds $100 million in digital U.S. dollars (USDC).
The creation of the BlackRock USD Institutional Digital Liquidity Fund follows the roaring success of the Bitcoin spot ETF approval in January. In an interview with Bloomberg early this year, Fink stated, "If we could ETF a Bitcoin, imagine what we could do with all financial instruments." ETFs have revolutionized the way investors can gain exposure to different asset classes, and in Fink's eyes, they will play a crucial role in the tokenization of asset classes in the future.
"We believe ETFs are a technology no different than Bitcoin was a technology for asset storage," Fink said. "We believe the next step going forward will be the tokenization of financial assets, and that means every stock, every bond will have its own QIP (qualified institutional placement); it’ll be on one general ledger … but the most important thing is we could customize strategies through tokenization that fit every individual. We would have instantaneous settlement … because it’s just a line item."
A few months later, BlackRock's filing for the Digital Liquidity Fund didn’t come as a surprise. With the success of the Bitcoin ETF, BlackRock and other institutions are realizing the power of crypto and blockchain. Fink's vision for the future is clear. The combination of ETFs and tokenization will transform the financial landscape, making asset classes more accessible, transparent, customizable, and secure. Blockchain technology will provide the foundation to tokenize assets at a large scale. BlackRock's strategic partnership with Securitize is a testament to the transformative power of blockchain and its ability to revolutionize the financial system.
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BlackRock isn't the first large institution to shift its sights to tokenization. Titan JPMorgan Chase & Co. launched Onyx Digital Assets, focusing on tokenization and handling over $700 billion of transactions since 2015. Citi has been working with blockchain since 2015, hiring Ryan Rugg, a former executive at IBM, to spearhead the bank’s tokenization efforts. Another firm, Franklin Templeton, has run its FOBXX fund on the public decentralized blockchain Stellar since 2021 — the first fund to run on a public blockchain.
BlackRock's involvement in tokenization is expected to accelerate the mainstream adoption of digital assets and blockchain technology. The market cap of tokenized assets could eclipse $10 trillion in 2030 in a bull case and $3.5 trillion in a bear case, according to a report from 21.co. Experts at Roland Berger also believe tokenization will be a $10 trillion market by 2030. The current market capitalization of tokenized assets is around $118 billion, representing a compound annual growth rate of 109% from 2024-2030, according to 21.co.
With the recent SEC filing, it’s clear where Fink and BlackRock have set their sights. With over $9 trillion in assets under management, BlackRock is moving into the tokenization market. While it wasn't the first, BlackRock is the largest and most influential player joining the space. The tokenized asset market will grow exponentially as BlackRock brings credibility in addition to its vast resources. The approval of Bitcoin ETFs in January 2024 has helped Bitcoin hit new all-time highs, proving the power of institutions in financial markets. With growing institutional interest from firms like BlackRock, tokenization will undoubtedly become a massive market.
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