BlackRock is launching two new tokenized money market funds.
The global asset manager has officially submitted its filings to the SEC (Securities and Exchange Commission) confirming the latest tokenized money market products.
BlackRock will be now operating BSTBL (BlackRock Select Treasury Based Liquidity Fund) and managing the BRSRV (BlackRock Stablecoin Reserve Vehicle) fund.
The first is an existing fund that allows shareholders to get exposure to tokenized ownership by being available on networks like Ethereum, part of the Onchain Shares program.
The second is more geared towards net new investors specializing within digital assets, especially institutional investors such as stablecoin issuers for stablecoin reserve management.
For both, digital asset wallet addresses need to be whitelisted and managed by engaging with each fund’s transfer agents (BNY Mellon and Securitize respectively).
Last September, BlackRock had indicated that it was seeking to make BSTBL Genius Act compliant. Instead, it has now launched a separate fund altogether.
The Fight for Stablecoin Issuer Reserves
BlackRock is not the last institution going after stablecoin issuers.
Since last year, a number of tokenized money market products have been launched by the likes of JP Morgan, Invesco, Morgan Stanley, Federated Hermes, and more.
In particular, they are targeting U.S. compliant stablecoin issuers for ensuring that stablecoin reserves are properly managed. Part of this requirement is to hold very liquid, short-term collateral assets in order to meet regular redemption demand.
Most of these funds are invested in exactly these types of assets. So what’s the difference?
While names like Franklin Templeton and BlackRock were one of the earlier institutions to tokenize their funds (i.e. either issuing or transferring shares on a blockchain network), the latter entrants have understood that the underlying blockchain technology is beneficial all around.
Firstly, any dividends and interests payable to shareholders can be managed on a more frequent time-basis. It doesn’t have to be a strict number of times per quarter or year, it can be real-time.
Secondly, it makes the fund itself more liquid as shares can be transferred 24/7 across a number of new networks and transfer agents (from traditional finance and digital assets).
Thirdly, the type of clients that will purchase shares are likely to be stablecoin issuers themselves, which means a broadening of the fund’s core client base and annual revenue per fund.
With that being said, competing investment and asset managers do not wish to fall behind to others in the same space. Stablecoin issuance is currently at $307B (per DefiLlama data), but U.S. onshore issuance of dollar-backed stablecoins by regulated issuers is still relatively under $100B.
Therefore, there is an underlying conviction that this is set to increase in the next few years, and institutions such as BlackRock, as well as others, want to be ready to offer their products at once.
But it also helps to optimize their own internal processes, including saving time on share/ledger transfers (once fully integrated), costs, and creating better transparency for participants.
Recently, the production of DTCC’s tokenization service showed just how many companies are ready to embrace the technology.
