ABU Dhabi 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 these assets into digital tokens that can be held, traded and transferred on a blockchain.
The fund is called Realize T-BILLS Fund and it will buy BlackRock’s iShares and State Street’s SPDR, tokenise units from these ETFs, and incorporate them within the fund, Dominik Schiener, co-founder of technology company Realize, told Reuters in an interview. It hopes to grow to a US$200-million fund.
Realise will tokenise the units of the T-BILLS Fund, while Neovision will manage it.
Tokenised Treasuries are a growing segment of the crypto market, with a market capitalisation of US$2.4 billion on public blockchains, primarily Ethereum, according to data platform rwa.xyz.
They are effectively digital tokens created on a blockchain and backed by US government debt, and issued both by blockchain-native firms and traditional institutions, notably BlackRock and Franklin Templeton.
In March, BlackRock launched its first tokenised fund called BUIDL on the Ethereum blockchain, investing 100 per cent of its assets in cash, US Treasury bills and repurchase agreements or repos. The BlackRock fund has a current market cap of US$530 million.
The Realize fund, the first tokenised fund to be domiciled out of the Abu Dhabi Global Market, will issue the US$RBILL token and will serve as the digital representation of the units of the fund. They will initially launch on both the IOTA and Ethereum blockchain networks.
“The goal is to bring fungible assets onchain. T-bills are the most liquid asset today in the real world,” said Schiener. “They’re also the best form of collateral, paying around 5 per cent.”
Dr Ryan Lemand, co-founder and chief executive officer of Neovision, said it makes sense to buy T-bill ETFs and tokenise them, instead of outright purchasing Treasury bills in the market. He noted buying cash Treasuries in the market would involve continuous transaction costs because they will have to be bought again and again. REUTERS
