BlackRock Inc. (BLK) is preparing to offer a digital share class of its Treasury Trust Fund via the Bank of New York Mellon (BNY), according to a filing Monday with the Securities and Exchange Commission.
DLT Shares won’t hold crypto but are expected to be purchased and held through BNY, which plans to use blockchain technology to maintain a “mirror record of share ownership for its customers,” according to the filing. The distributed ledger technology (DLT) shares can only be bought through BNY.
BlackRock’s Treasury Trust Fund invests in cash and U.S. Treasury securities. The management fee is 0.18% for DLT Shares.
BlackRock declined to comment on the filing to etf.com as the firm is in a quiet period.
“BlackRock has shown that they want to be a leader in finding ways to use blockchain technology to improve and enhance traditional finance processes,” Matt Apkarian, associate director of product development at Cerulli Associates, told etf.com.
In March 2024, the world’s largest asset manager—which runs the fastest-growing spot bitcoin ETF, the iShares Bitcoin Trust (IBIT)—launched its first investment vehicle offering cash and U.S. Treasury bills rendered as electronic copies and transferred to a crypto network: the BlackRock USD Institutional Digital Liquidity Fund (BUIDL).
In the case of the Treasury Trust Fund news, BNY as an intermediary (not BlackRock) will tokenize the shares that its clients purchase.
In an April 2024 episode of etf.com’s Advisor Insider, Ric Edelman, founder of Digital Assets Council of Financial Professionals, said that he believes tokenization will replace ETFs within 10 years, sparking an “entire renaissance for the asset management and financial services industries.”
Meanwhile, Apkarian said his firm has spoken with several industry players that believe blockchain can serve as a way for firms to establish cash management businesses, which are otherwise notoriously difficult and expensive to set up.
“We will continue to see additional use cases as the industry works toward more widespread use of tokenization, and these use cases will help the industry overcome the negative connotations brought to blockchain technology because of its association with cryptocurrency,” Apkarian said. “Still, the industry is far away from an eventual complete transition of our transactional system operating entirely on blockchain, which is where some believe we are headed.”
He added that there must be significant operational and regulatory development, which he’s heard from some thought leaders will take a decade or two.
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