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Future of stock markets? BlackRock takes step towards tokenisation of financial assets

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By Imelda Cotton - 
BlackRock tokenisation financial assets stocks
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US investment giant BlackRock has created a tokenised private equity fund following a foray into bitcoin and exchange-traded funds in January.

The world’s largest asset firm will partner with financial services company Securitize to launch BlackRock USD Institutional Digital Liquidity Fund Ltd, according to a document filed with the US Securities and Exchange Commission.

The filing does not reveal what assets the fund will hold but does disclose that it was incorporated in the British Virgin Islands last year and that the minimum investment from investors will be set at US$100,000.

It also shows $525,000 in sales commissions and indicates the size of the fund to be “indefinite”.

Other technical details of the fund are unclear at present and there is no set launch date.

Digital asset platform

Securitize is a digital asset management platform with locations across the US, Japan and Europe.

Its presence on the BlackRock filing suggests the product relates to the tokenisation of real-world assets.

Tokenisation is a method of purchasing securities in the form of digital assets using blockchains.

It has been reported to significantly lower investment barriers, making high-value assets such as real estate and fine art more accessible to a wider audience by dividing them into affordable tokens.

The process enhances liquidity by facilitating easier trades in digital marketplaces and democratises ownership by allowing more people to invest in previously exclusive markets.

It has been heavily promoted as one of the few viable use cases for blockchains.

Previous efforts

BlackRock’s move makes it the latest Wall Street major to experiment with putting money on blockchains.

Financial heavyweights including European hedge fund management company Brevan Howard and US global investment firm KKR & Co have previously announced efforts to tokenise certain parts of their funds.

US multinational bank Citigroup has estimated the tokenisation market could grow to as much as $5 trillion by 2030.

Technological transformation

In the past, BlackRock chief executive officer Larry Fink has voiced his support for tokenisation as a “technological transformation”.

“We believe the next step going forward will be the tokenisation of financial assets and that means every stock, every bond will basically have its own CUSIP [Committee on Uniform Security Identification Procedures identification number], it will be on one general ledger,” he said in January.

“It will all be on one general ledger […] every investor, you and I, will have our own number, our own identification [and] we could rid ourselves of all issues around illicit activities about bonds and stocks and digital by having a tokenisation.”