BlackRock’s Tokenized Fund | Ether Faces SEC Scrutiny

Geared towards qualified institutional investors, typically those with a minimum of $25 million in investable assets, the fund introduces a novel investment avenue. Participating investors can establish a digital wallet with Securitize, requiring a minimum stake of $5 million. Upon investment, they receive tokens valued at $1 each, entitling them to daily accrued dividends deposited directly into their wallets as new tokens on a monthly basis. The tokens are meant to maintain that $1 value, according to a company announcement. That is similar to stablecoins and shares in money-market mutual funds. 

The fund will invest in cash, U.S. Treasury bills and repurchase agreements, allowing investors to earn interest while holding the token on the blockchain. Current interest rates on such instruments are generally between 5.2% and 5.4%.

Investors can transfer their tokens to other approved investors at any time. Initial participants include crypto firms Anchorage Digital Bank, security specialist BitGo, the Coinbase crypto exchange and digital financial services provider Fireblocks.

BlackRock follows the footsteps of asset manager Franklin Templeton who launched the first such fund in 2021 on the Stellar blockchain. It had $324 million in assets under management as of last month and offers a seven-day yield of 5.3%.

According to anonymous sources cited by Fortune, the SEC's scrutiny suggests a potential effort to classify ether as a security. SEC Chair Gary Gensler previously indicated that cryptocurrencies generated by blockchains using a proof-of-stake model, a system Ethereum adopted in 2022, could bear similarities to investment contracts and thus fall under securities regulation.

The spotlight on the issue has intensified due to recent endeavors by major asset management firms like Fidelity and BlackRock to secure approval for spot ether exchange-traded funds (ETFs). The SEC faces a May deadline to approve or reject the first application from asset manager VanEck.

The initiative is part of a broader plan by GPIF, unveiled on Tuesday, to diversify its portfolio, traditionally consisting of domestic and international bonds, equities, real estate, infrastructure projects and private equity, into an array of other assets also including forests, farmland and gold.

Over the last week, the transaction volume on Solana’s decentralized exchanges (DEXs) has posted a remarkable increase of more than 80%, reaching $21.3 billion, in stark contrast to Ethereum DEXs, which had an 11% rise to $19.4 billion, according to data from Defi Llama. The daily active addresses on Solana have surged past 1.2 million, more than doubling the count in February, blockchain data shows.

The surge in trading activity is largely driven by the popularity of presales, a strategy under which tokens are offered to selected buyers prior to their official launch. In these transactions, investors commit funds to a designated cryptocurrency address and receive their tokens at a future date., Presales of Solana-based meme coins have garnered close to $150 million in the past week alone, according to estimates by a pseudonymous analyst known as @ZachXBT on X.