Blocks with Benefits’ Post

Tokenization is the future of money markets and many other real world assets. BlackRock's BUIDL money market is revolutinizing the interactions of users with money market products through it's enhanced accessibility and more democratized accessibility

💡 Thoughtful yet simple benefits of redefining asset management with "all assets onchain" in the new blockchain era

What makes the functionality of BlackRock's money market account on Ethereum different? First, a brief intro to the fund: 1. Blackrock's BUIDL money market fund holds treasuries, cash, and repos. 2. It pays a yield to the asset holder's wallet. 3. Each unit of the fund maintains a $1 peg. Nothing special here. So what's special? And why should you care? In my opinion, it all comes down to the functionality of public blockchains as *global asset/accounting ledgers.* If you understand these 5 items, you'll understand why *all* assets will eventually be tokenized on public blockchains. 1. The ledger itself. Ethereum is a global asset/accounting ledger. It's really good at keeping track of who owns what. And Blackrock doesn't have to pay for that — they outsourced the capex to a global network of individuals running the network. 2. Network Effect. As a global asset manager, Blackrock is making a bet that their customers (and even competitors) will have Ethereum wallets in the future. If this is true, anyone in the world (subject to KYC) can interact peer-to-peer with assets issued by Blackrock — with Ethereum's decentralized network of computers maintaining the ledger of who owns what. 3. Multi-functionality of the asset. Because Blackrock's BUIDL is issued on Ethereum as a token, if a user sends their BUIDL tokens to another user, the yield goes with it — automatically sent to the wallet that now holds the asset (again, Ethereum handles the accounting of all of this automatically for Blackrock). 4. Re-read #3. Spendable cash could become a yield-bearing asset as stablecoins/money market accounts proliferate on public blockchains. 5. Efficiency. By issuing the assets onchain, Blackrock utilizes a global, public accounting ledger rather than the maze of private ledgers used today. This removes the need for onerous and complex reconciliation and decreases financial instability risk related to the rehypothecation of assets — and the related accounting issue rooted in disparate, private accounting ledgers. ---- At the end of the day, asset managers such as Blackrock make money by issuing and managing assets for their clients. Public blockchains are just a new way to 1) create new financial products, 2) account for those financial products. The primary winners when it's all said and done? 1. The fast-moving incumbents. 2. The public blockchains that issue and settle the assets. [TradFi + Crypto will win together] Data: Blackrock's BUIDL money market AUM powered by Token Terminal (link in the comments for a *free* PRO Account, normally a $4k value). P.S. The Q1 issue of The Ethereum Investment Framework will be published 4/17. It covers topics such as this one and much, much more. If you'd like to access the flagship quarterly report when it's released next week see the link in the comments.

What are the implications of BlackRock launching a stablecoin called #BUIDL on #Ethereum? Linked article has a great analysis. TL;DR All institutions will move to public blockchains (i.e. Ethereum) b/c they offer a superior accounting system for financial assets. Why was Ethereum chosen? 1. Smart contracts (automated biz logic & funds admin) 2. Interoperability (fund can be used as collateral in DeFi apps) 3. Multi-function Assets (onchain funds are programmable money, unlike TradFi) 4. Security/lindy (Ethereum is the most decentralized & secure chain, & on it's way to become THE global settlement layer for the world's financial system) 5. Liquidity (Ethereum has the largest network effects) What are the long-term implications? 1. Faster path to proper regulation 2. Other stablecoins, namely USDT/USDC, have big competition 3. Blackrock has signaled to TradFi that Ethereum is safe to issue tokenized funds 4. All of finance will move to public blockchains, this is just the beginning 5. All the above have huge implications on the future valuation of $ETH as an asset h/t Enterprise Ethereum Alliance

Is your business starting to receive questions around Bitcoin or Virtual Assets from Prospective or Existing Clients? "Are we able to allocate some assets to a Virtual Asset position within our portfolio?" "How would we go about storing Virtual Assets in our structure?" "What mechanisms and controls do you have in place if we wanted to make an investment?" Taking Bitcoin for example, there are two main paths: purchasing Bitcoin directly and storing it securely in cold storage or opting for a Bitcoin Exchange Traded Fund. Here's a breakdown of the differences in compliance, operational mechanisms, and costs to help in your considerations:  1. Compliance 👮 Bitcoin in Cold Storage:    - Directly buying Bitcoin requires using regulated exchanges or OTC desks, preferably one within your jurisdiction of residence.    - Investors must ensure adherence to local regulations, ensuring they have sufficient policies, procedures and controls in place to properly manage this type of asset.  - Insurance in case of theft or loss.  BTC ETF:  - ETFs are regulated financial products, simplifying compliance for investors.    - No need to manage individual virtual assets, as the ETF provider handles custodial and regulatory concerns.  - Suitable for investors who prefer streamlined reporting within traditional brokerage accounts. 2. Operational Mechanisms ⚙️ Bitcoin Cold Storage:  - Investors purchase Bitcoin and transfer it to a hardware wallet or cold storage solution for maximum security.    - Requires technical knowledge to set up and manage storage, ensuring private keys remain safe.    - No intermediaries, investors have full control over their holdings. BTC ETF:  - Buying a BTC ETF involves purchasing shares through a stockbroker, just like any traditional ETF.    - Investors do not own the underlying Bitcoin but gain exposure to its price.    - Managed by professional custodians who should ensure the Bitcoin backing the ETF is securely stored. - varying performance depending on which ETF is acquired 3. Costs 💰 Bitcoin Cold Storage:  - Upfront Costs: Exchange fees for buying Bitcoin, IT infrastructure, hardware wallet expenses and ensuring you have qualified staff or consultants engaged to produce your policies, procedures and controls.    - Ongoing Costs: staffing or consultant costs, albeit minimal. - BTC ETF:  - Upfront Costs: Broker Fees  - Ongoing Costs: ETFs charge an annual management fee of anywhere between 0.2% - 1.5%, Custody Fees, ETF performance monitoring  - Premiums/Discounts: ETF prices may trade at a premium or discount to Bitcoin’s actual price.  - Convenience Costs: Higher fees for the ease of use and regulatory simplicity.  If you are starting to receive these questions or feel that you need assistance for when that time comes CThru is here to help. #Cryptocurrency #Compliance #AssetManagement #Bitcoin #Finance #InvestmentPortfolio #WealthManagement #FutureOfFinance

Blackrock issued a $100m tokenized money market fund on Ethereum last week. It's interesting because I keep hearing the banks say that they can't do anything on Ethereum due to lack of regulation. But it didn't stop Blackrock from compliantly issuing tokenized assets onchain with Securitize as the transfer agent and tokenization platform. So why would they do it? In my opinion, the answer is pretty simple. *Public* Blockchains (as opposed to private/permissioned blockchains) offer a superior accounting system for financial assets. 5 reasons why they may have chosen Ethereum: 1. Smart contracts. Automatically execute business logic and fund admin — on a secure, global accounting ledger. 2. Interoperability. Because Blackrock issued the fund on Ethereum, the tokens representing an interest in the fund can in theory function as collateral within DeFi applications. 3. Multi-Function Assets. Unlike traditional assets, tokens are multi-functional and can be held in self-custody. Tokens could be used for payment, transferred peer-to-peer, used as collateral, to earn yield, etc. 4. Security/lindy. Ethereum is one of the most decentralized and secure public blockchains on the planet. 5. Liquidity. Ethereum has the largest network effects of any public blockchain today across users, value-locked, applications, transactions, developers, etc. --- What are the potential longer-term implications? 1. A speedier path to more regulation around public blockchains and the firms building products and services on them. 2. The demise of Tether? Once Blackrock starts issuing stablecoins and sharing the yield, who is going to want to hold USDT? USDC/Circle will have to change its business model as well. 3. It's important to recognize that there are industry leaders and then there is everyone else (followers). Blackrock is essentially telling the rest of TradFi that Ethereum is safe to issue tokenized funds. 4. My long-term thesis is that *all of finance* will operate on public blockchain rails in the future. This actually seems obvious to me. It feels like this move by Blackrock could be the start of something that we look back on in 5-10 years time. 5. If all of finance operates on public blockchains in the future, and Ethereum is one of the majors, then how should one think about Ethereum's potential future value? ---- I created The Ethereum Investment Framework specifically to address the last question. We're releasing the Q1-24 issue on 4/17 and it's powered by Artemis Analytics data. If you'd like to have the free report dropped into your inbox when it's released, see the first comment.

Crypto exchanges and brokers, Shift Markets and Cryptio are partnering to help the next generation of enterprises meet regulatory requirements for digital asset licenses. Exchanges, funds, stablecoin issuers and banking institutions can now benefit from: 1. End-to-end automation for crypto exchanges and brokers with Cryptio’s back-office OS and Shift Markets’s marketplace infrastructure. 2. Reporting suite to help meet requirements for FinCEN, MTL, PSP, MiCA and VARA licenses. 3. Simplified data reconciliation and accounting processes. 4. GAAP- and IFRS-compliant reports to help you manage regulatory complexities across various jurisdictions. Read how Cryptio and Shift are streamlining the path for regulatory reporting compliance > https://lnkd.in/dvTT4Arf

Bitcoin crashed almost 20% in a matter of days. This extreme volatility is why accurate crypto accounting is mission-critical. Consider this: One well-known, publicly traded, BTC miner faced an unrealized loss of over $150 million in just three days based on their current BTC holdings. Does that change the HODL strategy - of course not! But does it have accounting implications that you need to get right - absolutely! Let's assume this miner valued its BTC holdings at roughly $62,000 on June 30, 2024. From August 2 to August 5, 2024, Bitcoin's price plummeted by nearly $12,000. For this company, that meant a paper loss of over $150,000,000. Now, imagine it's September 30 and this company is reporting quarterly results. Under fair value accounting principles, they must report this unrealized loss on their income statement, reflecting then-current market value. Reporting this loss accurately without robust systems to track all their individual lot holdings would be nearly impossible. One miscalculation could lead to: • Misinformed stakeholders • Flawed financial decisions • Potential regulatory issues (And at a large scale) I recently wrote an article addressing this topic in Accounting Today, “𝗕𝗮𝗹𝗮𝗻𝗰𝗶𝗻𝗴 𝗰𝗿𝘆𝗽𝘁𝗼'𝘀 𝘃𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆 𝘄𝗶𝘁𝗵 𝗳𝗮𝗶𝗿 𝘃𝗮𝗹𝘂𝗲 𝗮𝗰𝗰𝗼𝘂𝗻𝘁𝗶𝗻𝗴 𝗽𝗿𝗶𝗻𝗰𝗶𝗽𝗹𝗲𝘀” Here’s the TLDR: 𝟭. 𝗘𝗺𝗯𝗿𝗮𝗰𝗲 𝗥𝗲𝗮𝗹-𝗧𝗶𝗺𝗲 𝗩𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 Shift from cost-less impairment models to fair value accounting. This allows for immediate reflection of market changes, providing a more accurate financial picture. 𝟮. 𝗜𝗺𝗽𝗹𝗲𝗺𝗲𝗻𝘁 𝗥𝗼𝗯𝘂𝘀𝘁 𝗗𝗮𝘁𝗮 𝗔𝗴𝗴𝗿𝗲𝗴𝗮𝘁𝗶𝗼𝗻 Utilize systems that can collect and consolidate data from multiple wallets and blockchains. This ensures a comprehensive view of your crypto assets across all holdings. 𝟯. 𝗣𝗿𝗶𝗼𝗿𝗶𝘁𝗶𝘇𝗲 𝗔𝘂𝘁𝗼𝗺𝗮𝘁𝗶𝗼𝗻 Invest in SOC-tested automated systems for calculations and reporting. This minimizes human error and provides more reliable, timely insights for stakeholders. 𝟰. 𝗘𝗻𝗵𝗮𝗻𝗰𝗲 𝗗𝗶𝘀𝗰𝗹𝗼𝘀𝘂𝗿𝗲 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗲𝘀 Prepare for increased transparency requirements. Report crypto activity as separate line items on balance sheets and income statements, with asset-by-asset disclosures. 𝟱. 𝗦𝘁𝗮𝘆 𝗔𝗵𝗲𝗮𝗱 𝗼𝗳 𝗥𝗲𝗴𝘂𝗹𝗮𝘁𝗼𝗿𝘆 𝗖𝗵𝗮𝗻𝗴𝗲𝘀 Proactively adopt new accounting standards before mandatory deadlines. This gives you a competitive edge and ensures compliance with evolving regulations in the crypto space. The stakes are high, but so is the potential. Accountants, your role is crucial. Accurate reporting enables confident investment. 📌 Access the full article below in the first link.👇