Backed Finance Rolls Out Crypto-Backed BlackRock ETF on Base Protocol

Switzerland-based blockchain protocol Backed Finance has launched the first-ever tokenized government bond on the Base network. 

This is an advertisement per Article 22 Prospectus Regulation.

🔵 🚀 Backed has issued the FIRST tokenized security on Base – bIB01, a tokenized short-term US treasury bond ETF.

We've been eagerly getting ready for Base’s mainnet launch, ensuring our tokenized RWAs are ready… pic.twitter.com/CKusCLUX1c

— Backed (@BackedFi) October 6, 2023

Culled from BlackRock’s iShares bond exchange-traded fund (ETF) UCITS, this financial instrument will be identified by the ticker symbol blB01. 

It represents a tokenized short-term US Treasury bond ETF, allowing investors to monitor the underlying asset’s value without the need for direct exposure to it.

Providing more details on its mission, Backed Finance stated that its core mission is to create real-world assets (RWAs) that are composable and interoperable with the blockchain ecosystem. 

The blockchain protocol operates on the Swiss Distributed Ledger Technology (DLT) Act, which allows it to create Backed-issued tokens (bTokens) that track the value of various assets like treasury ETFs, corporate bond ETFs, and equities. 

Impressively, these tokenized assets can be transferred from one wallet to another without any restriction. This way, investors have a digital representation of their RWA without the baggage of physically handling them.

Backed Finance’s recent milestone leans into a growing interest in the blockchain and crypto space, which has seen many companies plan to offer ETFs to track some major cryptocurrencies. 

A recent instance is the VanEck Ethereum Strategy Fund (or EFUT), which got approval from the US Securities and Exchange Commission (SEC) and started trading on October 3. 

Fellow asset management firm Bitwise also got the nod to launch its Ethereum futures contracts from the regulatory body.

Not for US Investors

Despite the United States being a promising market for blockchain-backed investments, it has been notably docile in providing clear regulatory guidance for the burgeoning industry. 

In contrast, prominent regulators like the SEC have adopted a more assertive regulatory stance, prompting numerous crypto-related businesses and opportunities to relocate overseas.

This impression has profoundly impacted the cryptocurrency space, as evidenced by Backed Finance’s explicit declaration that its RWA offering is unavailable to US residents and investors.

Explaining the rationale behind this significant decision, the Backed Finance team clarified that they do not intend to register their tokenized financial assets under the US Securities Act of 1933 or with any regulatory authority within the country.

This unexpected move is noteworthy given that the protocol’s RWA initiative operates on the Base network, a layer-2 blockchain solution owned by the US-based Coinbase crypto exchange.

Speaking on the choice of the Base network over more conventional options like the Ethereum blockchain, Backed Finance’s Head of Product, Giorgio Giuliani, highlighted Base’s strong commitment to being developer-friendly. 

The blockchain protocol also emphasized the cost-effectiveness of Base’s gas fees for users and developers compared to the Ethereum network.