Backed Finance, a blockchain protocol headquartered in Switzerland, has unveiled the inaugural tokenized government bond on the Base network.
Derived from BlackRock’s iShares bond exchange-traded fund (ETF) UCITS, this financial tool will be recognized by the ticker blB01.
This instrument symbolizes a tokenized version of a short-term US Treasury bond ETF. It offers investors the capability to track the inherent value of the underlying asset without the obligation to directly engage with it.
Elaborating on their broader vision, Backed Finance articulated that their primary objective is to forge real-world assets (RWAs) that seamlessly integrate and operate within the blockchain milieu.
Operating under the Swiss Distributed Ledger Technology (DLT) Act, the blockchain protocol has the capability to generate Backed-issued tokens (bTokens) that mirror the value of a diverse range of assets, including treasury ETFs, corporate bond ETFs, and stocks.
What’s particularly noteworthy is the unrestricted transferability of these tokenized assets between wallets. This provides investors with a digital embodiment of their real-world assets (RWAs), eliminating the need for direct physical management or handling of the assets themselves.
Backed Finance’s latest achievement reflects a rising trend and enthusiasm in the blockchain and cryptocurrency domain. Recently, numerous companies have expressed their intent to launch ETFs that follow major cryptocurrencies.
A pertinent example is the VanEck Ethereum Strategy Fund (often referred to as EFUT). This fund secured approval from the US Securities and Exchange Commission (SEC) and initiated its trading activities on October 3.
Similarly, Bitwise, another asset management powerhouse, received approval from the regulatory authority to debut its Ethereum futures contracts.
Not for US Investors
While the United States presents a lucrative landscape for investments anchored in blockchain, it has notably lagged in offering explicit regulatory directives for the rapidly evolving sector.
In juxtaposition, leading regulatory bodies, such as the SEC, have showcased a more proactive regulatory approach, driving many crypto-centric enterprises and ventures to shift their base abroad.
Such perceptions have left a marked imprint on the cryptocurrency arena. This is manifestly evident in Backed Finance’s forthright statement that its RWA offerings are off-limits for US-based residents and investors.
Elaborating on their pivotal decision, the team at Backed Finance elucidated that they have no plans to register their tokenized financial instruments under the US Securities Act of 1933 or with any corresponding regulatory body within the US.
This move is particularly intriguing considering the protocol’s RWA venture functions on the Base network, a layer-2 blockchain platform under the umbrella of Coinbase, a renowned US-based cryptocurrency exchange.
Commenting on the preference for the Base network over more mainstream choices like the Ethereum blockchain, Giorgio Giuliani, Backed Finance’s Head of Product, accentuated Base’s unwavering dedication to fostering a developer-friendly environment.
Additionally, the protocol underscored the competitive advantage of Base’s gas fees, which are markedly more affordable for both users and developers, especially when juxtaposed with the Ethereum network’s fee structure.