My Takeaways from Paris Blockchain Week 2024 and the Institutional Buzz Around BUIDL

A Paradigm Shift in Money Market Funds: BlackRock USD Institutional Digital Liquidity Fund (BUIDL)

On April 10th, I was invited to the event “Treasury in the Digital Money Era” hosted by the Paris Blockchain Society in collaboration with top-tier firms like Accenture, Onyx by J.P. Morgan, Citi Treasury and Trade Solutions, Fortris, and Societe Generale-FORGE.

Hosted by Paris Blockchain Society

As a professional working in the evolving crypto industry who had previous experience in cash management at BNP PARIBAS, I was looking forward to hearing what institutions had to say about BUIDL — BlackRock USD Institutional Digital Liquidity Fund. I was not disappointed.

Exploring Digital Treasury Innovations with Accenture, Onyx by J.P. Morgan, Citi, Fortris, and Societe Generale — FORGE

This event brought together CAC40 CFOs, Treasurers, and Payments C-Suite Executives, as well as professionals from the crypto industry. Discussions focused on the integration of digital assets in treasury operations, cash management, and cross-border payments, providing rich insights into the current state and future possibilities of digital finance.

The speakers were:

• Basak Toprak, Executive Director, EMEA Head of Coin Systems at Onyx by J.P. Morgan
• David Cunningham, Global Head of Strategy and Partnerships for Digital Assets at Citi’s Treasury and Trade Solutions
• Noah Herman, CRO at Fortris
• Guillaume Chatain, Head of Sales at Societe Generale-Forge
• John Cronin, CEO Europe at Zodia Custody
• Alexandre Laizet, Digital Assets Lead at Accenture (Moderator)

“Treasury in the Digital Money Era” speakers

Amid the variety of topics discussed — from the potential of an ETH ETF to the strategic marketing behind memecoins — the subject that captured the audience’s attention was BlackRock’s BUIDL, the newly launched tokenized money market fund.

As a quick reminder, here is the definition of a money market fund from Investopedia:

“A money market fund is a type of mutual fund that invests in high-quality, short-term debt instruments, cash, and cash equivalents.

Though not quite as safe as cash, money market funds are considered extremely low-risk on the investment spectrum.

A money market fund generates income (taxable or tax-free, depending on its portfolio), but little capital appreciation.

Money market funds should be used as a place to park money temporarily before investing elsewhere or making an anticipated cash outlay; they are not suitable as long-term investments.”

Now that we all have the definition in mind, let’s take a deep dive into BlackRock’s BUIDL’s main characteristics and reflect on how it reshapes traditional money market funds:

• Fund Manager: BlackRock
• Fund Custodian: BNY Mellon
• Fund Administrator: BNY Mellon
• Transfer Agent: Securitize, LLC. The leader in tokenizing real-world assets
• Settlement Asset: USDC, a dollar-pegged stablecoin by Circle
• Blockchain Deployment: Launched on the Ethereum blockchain, BUIDL offers a stable value of $1 per token. It targets institutional investors
• Professional Fund: BUIDL operates as a professional fund. It consists of various low-risk investments such as short-term U.S. Treasury bills and repurchase agreements (with assets' maturity within three months) for high liquidity and low duration risk
• Access: The fund is only accessible to whitelisted investors after completing a KYC and AML process
• On-chain Liquidity: USDC liquidity facility managed via smart contracts, allowing 24/7 exchange of BUIDL tokens for USDC. Investors can exchange their BUIDL tokens for USDC at any time, 24/7 through a USDC - BUIDL pool accessible via the interface of Securitize Markets and/or through direct interaction with the smart contract
• Dividends Distribution: Dividends accrue daily at 3:00 PM (New York time) for the registered shareholder of the fund and are distributed in kind (the fund's token) on the first business day of the following month. Each shareholder's dividend corresponds to their proportional share of the net income from that day's investments, minus fees related to the commission—like what exists already in a decentralized finance (DeFi) pool system
• DeFi: BUIDL is an ERC-20 token. It would be conceivable to imagine a "wBUIDL" (Wrapped BUIDL) to integrate into decentralized finance (DeFi) protocols
• Tokenized Funds: There are already tokenized funds deployed on public blockchains: Franklin Templeton Benji (300 million - Polygon, Stellar), Ondo Finance OUSG (104 million - Ethereum, Polygon, Solana), Matrixdock STBT (80 million - Ethereum)

The bottom line is.

Blockchain technology is driving disruptive financial innovations. Tokenized money market funds, smart contracts, and stablecoins are reshaping traditional finance and the way companies, banks, and institutions conduct business and interact with each other.

“I think what was most important for the audience to take away is that stablecoins are not going away. They are the killer app of crypto and they will have an impact not just on banks but on global business processes. It will create new industries and it will eradicate some existing industries.” — John Cronin, CEO Europe of Zodia Custody

Thanks for reading and stay tuned for more articles! If you enjoyed reading this article, please follow and clap for crypto and blockchain contents.

Resources:

1. BlackRock Launches Its First Tokenized Fund, BUIDL, on the Ethereum Network. Business Wire, March 20, 2024. Available at https://www.businesswire.com/news/home/20240320771318/en/BlackRock-Launches-Its-First-Tokenized-Fund-BUIDL-on-the-Ethereum-Network.
2. New BlackRock Tokenized Fund Garners $160 Million in Deposits. The Block, March 22, 2024. Available at https://www.theblock.co/post/285142/new-blackrock-tokenized-fund-garners-160-million-in-deposits.
3. Conference Highlights: Exploring Treasury in the Digital Money Era. Paris Blockchain Society, LinkedIn Post, April 10, 2024. Available at https://www.linkedin.com/posts/paris-blockchain-society_conference-highlights-exploring-treasury-activity-7189680198005465088-D40Z.

Disclaimer

The information contained in this article is provided for general informational purposes only and is not intended to be, and should not be relied upon as, legal, financial, or professional advice. This article is based on the information available at the time of its preparation and is subject to change without notice. The Author assumes no liability or responsibility for any errors or omissions in the content of this assessment or for any actions taken based on the information provided herein. You should seek professional advice from a qualified attorney or financial advisor before making any decisions or taking any actions based on the information contained in this article. The Author disclaims all liability and responsibility for any actions taken or not taken in reliance on the information contained in this article.