On March 20, 2024, BlackRock announced the launch of its $1 yield-bearing stablecoin. Named BUIDL for “BlackRock USD Institutional Digital Liquidity“, it allows investors to acquire a share in a fund made up mainly of US Treasury bonds.
An event that underlines the growing importance of stablecoins in finance.
Leading player in finance and cryptocurrencies
BlackRock is the world’s largest asset management company. The company manages over $10,000 billion in assets, more than three times France’s GDP. It operates mainly in the United States, Europe and Asia, in more than 60 cities across 27 countries, and employs nearly 12,000 people.
In early 2024, after obtaining regulatory approvals in the United States, the group launched its Bitcoin ETF, which enables investment in Bitcoin without technical knowledge. 3 months later, this ETF has already exceeded $15 billion in assets under management.
The group sees great potential in blockchain technologies applied to finance. On July 6, 2023, CEO Larry Fink reiterated that asset tokenization would revolutionize finance. He even told Bloomberg in January 2024: “Tokenization is the future of finance.”
BUIDL, a real-asset fund
BUIDL is a Real World Assets (RWA) fund. The assets are mainly US Treasuries and cash.
Shares in this fund are worth $1 and are tokenized: this means that a token has been created on a blockchain to represent this share of the fund. The token can then be easily exchanged or held. Each fund share is worth 1 dollar and is represented by the BUIDL stablecoin.
The blockchain used for BUIDL is Ethereum, the world’s leading blockchain.
Extract from BlackRock’s press release dated 20/03/2024:
”(…) Tokenization of the BUIDL Fund will offer investors significant benefits by enabling the issuance and trading of property on a blockchain, broadening investor access to on-chain offerings, providing instant and transparent settlement, and enabling cross-platform transfers.”
Monthly yield
Each BUIDL token is worth 1 USD. This is why it can be seen as a stablecoin of the US dollar. But unlike other stablecoins, which are intended to facilitate exchanges and payments, the BUIDL token is primarily intended to be held to generate returns. Interest is paid once a month in the form of additional tokens.
Extract from the BlackRock press release:
” BUIDL seeks to offer a stable value of 1 USD (US dollar) per token, and pays daily accumulated dividends directly to investors’ wallets, in the form of new tokens, each month. The fund invests 100% of its total assets in cash, US Treasuries and repurchase agreements, allowing investors to earn a return while holding the token on the [Ethereum] blockchain. “
A reminder?
With the eco Account, you can invest in stablecoins simply by transferring euros, and earn a return every day.
Who can invest in BUIDL?
While stablecoin has been publicly tokenized on the Ethereum blockchain, it is not yet publicly available.
For the time being, only previously authorized wallet addresses will be able to acquire BUIDLs. This means that only financial professionals with a contractual relationship with Blackrock can buy or resell BUIDLs on behalf of their clients.
Tokenization, a fundamental trend
This revolution in finance has only just begun: the tokenization of real-world assets makes it easy to buy and exchange traditional assets by purchasing tokens that represent shares in these assets.
Almost anything can be tokenized: a solar power plant, wine, an apartment, copper… In fact, for the past five years, this has been the vision driven by Tech For Change, the company dedicated to Compte eco: to offer simple financial services based on blockchains to deliver high-performance returns on positive-impact assets.
