Blockchain: BUIDL TOGETHER
Kelroy James
Supply Chain Management| Predictive Analytics| Blockchain | Comptia Pentest + |Innovation Fellow
BlackRock, the world's largest asset-management company, is expanding the reach of its tokenised real-world asset fund, BUIDL, by making it accessible on five additional blockchain networks: Aptos, Arbitrum, Avalanche, Optimism's OP Mainnet, and Polygon. BUIDL is a blockchain-based money market fund backed by short-term U.S. Treasuries and has amassed $520 million in assets, making it the largest product in the $2.3 billion tokenised U.S. Treasury market. The fund aims to provide institutions and protocol treasuries with a yield-earning or collateral-backed option for their on-chain cash.
The expansion of BUIDL to these new blockchain networks is part of BlackRock's strategy to develop an ecosystem that takes advantage of the benefits of tokenization, such as faster settlements and operational efficiencies. Securitize, the tokenisation platform that partnered with BlackRock for this initiative, believes that the new chain integrations will attract more investors looking to leverage the underlying technology. The management fee for BUIDL varies across the different blockchain networks. On Ethereum, Arbitrum, and Optimism, the fee is 50 basis points, while on Aptos, Avalanche, and Polygon, it is only 20 basis points. The ecosystem development organizations of these latter three networks have agreed to pay BlackRock a quarterly fee, incentivizing the adoption of BUIDL on their respective blockchains.
The payments landscape is seeking the "holy grail" of seamless cross-border payments, which remains a complex challenge. Unlike domestic payments that are shifting towards real-time and 24/7 models, cross-border transactions are still fraught with inefficiencies due to the lack of a unified framework that all banks follow. Blockchain technology has been touted as a potential solution, but experts caution that it is not a panacea. Blockchain can complement existing messaging solutions like SWIFT by providing a more efficient way to update the balance sheets of financial institutions involved in a transaction.
Stablecoins, cryptocurrencies pegged to a stable asset, are also gaining prominence, but broader adoption is hindered by the lack of regulatory frameworks. For any cross-border payment solution to succeed, public-private collaboration will be essential. The financial system is a partnership between central banks and private institutions, and new technologies must be integrated smoothly and securely into existing infrastructures. If the regulated financial sector fails to keep up with the digital economy, unregulated services could fill the vacuum and introduce new risks. Looking ahead, experts envision a future where blockchain plays a complementary role, providing a "common state" that allows for better orchestration of balance sheet updates. This could unlock real-time, 24/7 cross-border payments and help the financial system keep up with the always-on, scalable, and smart digital economy.
Goldman Sachs is planning to spin off its digital assets platform into a new company focused on creating and trading financial instruments on blockchain networks. The investment bank is in discussions with potential partners, including electronic trading platform Tradeweb Markets, to enhance the platform's capabilities and develop new offerings. The new entity is expected to be completed within the next 12 to 18 months, pending regulatory approvals. Goldman Sachs emphasized the importance of industry ownership for the platform's success. The bank aims to create marketplaces for tokenized real-world assets (RWAs), focusing on the U.S. fund complex and European debt markets.
These initiatives will target financial institutions and utilise permissioned blockchains to ensure security and compliance. The renewed momentum in crypto is partly attributed to the proliferation of exchange-traded funds (ETFs) for digital assets. Since January, U.S. regulators have approved nearly a dozen Bitcoin ETFs, and in July, several spot Ether ETFs were greenlighted for listing on U.S. exchanges. Goldman Sachs has been among the largest buyers of Bitcoin ETFs in 2024. Demand is surging for tokenized RWAs offering low-risk yields from Treasury bills and other money market instruments. As of November 14, tokenized U.S. Treasury debt commands approximately $2.4 billion in total value locked. Goldman Sachs' plans to create marketplaces for these tokenized real-world assets aim to capitalize on this growing demand.
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Mastercard and JPMorgan have partnered to integrate their blockchain-based payment solutions, the Mastercard Multi-Token Network (MTN) and JPMorgan's Kinexys Digital Payments. This collaboration aims to expand payment availability, address time zone challenges, and improve transparency and settlement speed for their mutual customers. The MTN will utilise Kinexys Digital Payments' payment rail for real-time transfers, allowing for seamless integration between digital marketplaces or platforms and commercial bank payment rails. Kinexys Digital Payments, formerly known as Onyx, was launched by JPMorgan in 2020 as the first bank-led blockchain platform powered by the JPM Coin, a dollar-pegged stablecoin.
The platform has since expanded to include euro-denominated payments and has seen a significant increase in daily transaction volume. Mastercard's MTN was first announced in June 2023 and has already conducted successful trials, including a proof-of-concept with the Reserve Bank of Australia to test the use of wrapped central bank digital currencies. The integration with Kinexys Digital Payments is expected to further enhance the value proposition of Mastercard's commercial transaction venues by providing access to secure and efficient payment rails. The collaboration between Mastercard and JPMorgan's Kinexys Digital Payments represents a significant step forward in the adoption of blockchain-based payment solutions in the business-to-business cross-border payment space. By leveraging their respective strengths, the two financial giants aim to address the pain points of traditional cross-border payments and provide their customers with a more seamless and transparent payment experience.
The integration of artificial intelligence (AI) and blockchain technology holds immense potential to transform industries. AI relies heavily on data, and the quality of that data is paramount. Blockchain technology can enhance the reliability of data fed into AI systems by providing a decentralised, tamper-proof ledger. One of the key challenges AI systems face is "hallucinations" - inaccurate or fabricated responses stemming from poor data quality. Blockchain's data integrity and immutability help mitigate this risk, as AI can access verified data from the decentralised ledger. Furthermore, blockchain's scalability makes it well-suited to support AI tools that require real-time data.
Blockchain can also play a crucial role in recognizing and rewarding content creators. Smart contracts on the blockchain can facilitate automated micro-payments to creators, ensuring fair compensation for their work. This transparency fosters a more equitable digital ecosystem, allowing artists, writers, and developers to benefit directly from their contributions. The convergence of AI and blockchain also enables the development of smart contracts - self-executing contracts that can be triggered by AI. This automation streamlines operations and enhances transparency, as all transactions are recorded on the blockchain. The integration of these technologies promises to reshape industries by enabling real-time data sharing, fostering innovation, and driving economic growth through more secure and transparent digital ecosystems.
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