Abu Dhabi firms to launch tokenized US Treasury bond fund

NEW YORK: Abu Dhabi-based firms Realize and Neovision Wealth Management have launched an investment vehicle that will buy units of exchange-traded funds (ETFs) focused on US Treasury bills and convert those assets into digital tokens that can be held, traded and transferred to blockchain. .

The fund is called the Realize T-BILLS Fund, and it will buy iShares BlackRock and State Street SPDR, tokenize units from those ETFs and include them in the fund, Dominique Schiener, co-founder of technology company Realize, told Reuters in an interview. The fund hopes to grow to a $200 million endowment.

Realize will tokenize shares of the T-BILLS fund, and Neovision will manage it.

WHY IS THIS IMPORTANT

According to data platform rwa.xyz, tokenized treasury bonds are a growing segment of the cryptocurrency market with a market capitalization of US$2.4 billion on public blockchains, primarily Ethereum.

Essentially, these are digital tokens created on the blockchain and backed by US government debt, and also issued by both blockchain firms and traditional institutions, notably BlackRock and Franklin Templeton.

In March, BlackRock launched its first tokenized fund, called BUIDL, on the Ethereum blockchain, investing 100 percent of its assets in cash, U.S. Treasury bills and repurchase agreements, or repos. The BlackRock fund’s current market capitalization is $530 million.

FOUNDATION DETAILS

The Realize Fund, the first tokenized fund listed outside of the Abu Dhabi Global Market, will issue a $RBILL token and serve as a digital representation of the fund’s shares. They will initially launch on the IOTA and Ethereum blockchain networks.

KEY QUOTES

“The goal is to introduce fungible assets into the chain. Today, Treasury bills are the most liquid asset in the real world,” Schiener said. “They are also the best form of collateral, paying around 5 percent.”

Dr. Ryan Lemand, co-founder and CEO of Neovision, said it makes sense to buy T-Bill ETFs and tokenize them instead of directly buying Treasury bills in the market. He noted that buying cash Treasury bonds in the market would incur ongoing transaction costs because they would have to be purchased over and over again.