- Switzerland-based blockchain protocol Backed Finance has introduced the world’s first tokenized government bond, derived from BlackRock’s iShares bond ETF UCITS.
- The digital representation of a short-term US Treasury bond ETF allows investors to track its value without directly owning the underlying asset.
- Backed Finance’s core mission is to integrate real-world assets (RWAs) into the blockchain ecosystem, generating Backed-issued tokens (bTokens) that mirror the value of various assets.
Backed Finance, a blockchain protocol hailing from Switzerland, has just introduced a groundbreaking financial product on the Base network. It’s none other than the world’s first tokenized government bond. This innovative asset, bearing the ticker symbol blB01, is derived from BlackRock’s iShares bond exchange-traded fund (ETF) UCITS. Essentially, it’s a digital representation of a short-term US Treasury bond ETF, allowing investors to track its value without having to directly own the underlying asset.
The core mission of Backed Finance revolves around seamlessly integrating real-world assets (RWAs) into the blockchain ecosystem. Under the Swiss Distributed Ledger Technology (DLT) Act, they possess the capability to generate Backed-issued tokens (bTokens) that mirror the value of various assets, including treasury ETFs, corporate bond ETFs, and equities. Notably, these tokenized assets can be transferred between different wallets with ease, eliminating the need for physical handling.
This achievement by Backed Finance aligns with the growing enthusiasm in the blockchain and cryptocurrency arena, where many companies are looking to introduce ETFs to track major cryptocurrencies. An example of this trend is the VanEck Ethereum Strategy Fund (EFUT), which gained approval from the US Securities and Exchange Commission (SEC) and began trading on October 3. Similarly, Bitwise, an asset management firm, received approval to launch Ethereum futures contracts from regulatory authorities.
However, while the United States holds promise as a market for blockchain-backed investments, it has been noticeably cautious in providing clear regulatory guidance for this burgeoning industry. In contrast, regulatory bodies like the SEC have taken a more assertive stance, causing many crypto-related businesses and opportunities to seek refuge abroad.
In response to this complex regulatory landscape, Backed Finance has made a noteworthy decision to exclude US residents and investors from participating in its RWA offering. The company has explicitly stated that it has no intention of registering its tokenized financial assets under the US Securities Act of 1933 or with any regulatory authority in the United States. This decision carries significance, especially considering that Backed Finance’s RWA initiative operates on the Base network, a layer-2 blockchain solution owned by the US-based Coinbase crypto exchange.
When asked about the preference for the Base network over more conventional options like the Ethereum blockchain, Giorgio Giuliani, the Head of Product at Backed Finance, pointed out Base’s developer-friendly approach and its cost-effectiveness in terms of gas fees for users and developers, as compared to the Ethereum network.