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BlackRock files with SEC to tokenize $150B treasury fund

BlackRock, one of the leading asset managers, has filed with the Securities and Exchange Commission (SEC) to convert its $150 billion Treasury Trust Fund to digital tokens, aka Digital share class (DLT Shares). Currently, the funds are not deploying blockchain technology; however, they will be sold through The Bank of New York Mellon (BNY Mellon), which intends to record the ownership of the fund shares using blockchain.

The minimum initial investment of DLT Shares for institutions is $3 million, whereas there is no subsequent minimum for additional investment.  

BlackRock’s filing to the SEC reads that BlackRock or its affiliates may purchase the DLT shares. Also, the investors “may purchase or sell shares without paying a sales charge”.   

“You (investors) may generally purchase or redeem shares of the Treasury Trust Fund each day on which the New York Stock Exchange and the Federal Reserve Bank of Philadelphia are open for business.”

Objectives of BlackRock’s Treasury Trust Fund

The Treasury Trust Fund invests only in government-backed securities that ensure safety, including cash, US Treasury bills, notes, and other US Treasury obligations. 

The fund aims to provide regular income, besides prioritizing liquidity and safety over funds. The filing also specified that the maturity period of the funds invested in securities is within 397 days or less from the date of purchase, meaning the issuer must repay the principal (initial purchase amount) within this time frame.

However, the dollar-weighted average maturity of the funds is not more than 60 days. Dollar-weighted average maturity is a financial metric that measures the average time securities take to mature, weighted by their market value or dollar amount.  

BlackRock has been actively involved in the crypto industry with its investment products, such as iShares Bitcoin Trust and iShares Ethereum Trust, and Bitcoin Exchange Traded Product (ETP). On April 29, Farside Investors reported that BlackRock’s daily Bitcoin ETF inflow reached approximately $970 million, signaling a bullish moment for institutional adoption of Bitcoin ETFs and Bitcoin’s price on the same day.  

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