BlackRock’s Ethereum Tokenized Fund Signals Institutional Adoption in Crypto

According to analysts at global investment firm AllianceBernstein, BlackRock’s entry into the cryptocurrency market with its first tokenized fund is seen as positive news for both traditional finance and the crypto industry.

BlackRock's Ethereum Tokenized Fund Signals Institutional Adoption in Crypto

BlackRock, the world’s largest asset manager, recently unveiled its USD Institutional Digital Liquidity Fund, which operates on Ethereum, the blockchain powering the second-largest cryptocurrency, ETH. In a report authored by Bernstein’s Gautam Chhugani and Mahika Sapra, they noted that BlackRock’s move “brings legitimacy” to Ethereum, a blockchain previously perceived mainly as a platform for retail speculation.

The report highlights that Ethereum and other blockchains were primarily viewed as “retail casinos” until now. However, with BlackRock’s involvement, the infrastructure initially built for retail speculation is now driving institutional utility. BlackRock’s initiative is expected to prompt more traditional institutional investors to explore on-chain funds.

BlackRock aims to offer its clients assets tokenized on Ethereum’s blockchain, enabling them to earn yield by holding tokens on the network. CEO Larry Fink has previously expressed interest in digital assets, with BlackRock seeking approval for a spot Ethereum exchange-traded fund (ETF), seen as a crucial step towards tokenization.

Last year, BlackRock made waves in the crypto space by applying with the Securities and Exchange Commission (SEC) to launch a spot Bitcoin ETF. The approval for this ETF in January marked a significant milestone, leading to its subsequent success. Now, BlackRock is eyeing an ETH product, allowing clients to gain exposure to Ethereum’s $427 billion market cap through a fund traded on a stock exchange.

Several other major fund managers, including Fidelity and Grayscale, are also seeking SEC approval for a spot Ethereum ETF. However, regulatory decisions on these proposed products have been delayed by the SEC.

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