Author Securitize Markets, LLC, as placement agent for BlackRock USD Institutional Digital Liquidity Fund Ltd. (“BUIDL”)
Summary This proposal seeks to introduce BUIDL - the BlackRock USD Institutional Digital Liquidity Fund Ltd. - as an on-chain, backing asset for Frax USD with exposure to U.S. dollar yield.
BUIDL is a tokenized U.S. Treasury product designed to provide decentralized organizations and other institutional investors a blockchain-based investment solution that can be used alongside other investments as a reserve backing of stable assets.
Benefits of holding BUIDL as a reserve backing asset may include:
- Yield generation
- Multiple options to transfer
- Minimized counterparty risk via industry leaders - Securitize, BlackRock, and Bank of New York Mellon
Background and Motivation [Please Check out the forum post for this section]
Proposal Details
General Overview: BUIDL will invest 100% of its total assets in cash, U.S. Treasury bills, notes and other obligations issued or guaranteed as to principal and interest by the U.S. Treasury, and repurchase agreements secured by such obligations or cash, allowing investors to gain exposure to one of the most liquid assets. Holders benefit from a fund seeking a stable value of $1 per token and may earn any yield that is paid through daily accrued dividends issued directly to investors’ wallets as new tokens each month.
As an ERC-20 token, BUIDL can be custodied by any provider that operates on the Ethereum public blockchain. BUIDL is also available natively on Polygon, Avalanche, Optimism, Arbitrum, and Aptos.
The current AUM of BUIDL across all integrated chains can be found via Dune (dashboard link at the end) or RWA.xyz. As of 12/12/2024, cumulative AUM across chains is $561,536,881. Additionally, as of 12/12/2024, BUIDL has processed 620 transactions with $1.38B in total volume.
Asset Eligibility: The Fund will invest 100% of its total assets, in both the primary and secondary markets, in cash, U.S. Treasury bills, notes, repurchase agreements, or other obligations that mature in 95 days or less from the settlement of the purchase of such securities. The Fund may invest in variable and floating rate instruments, and transact in securities on a when-issued, delayed delivery or forward commitment basis.
The Fund will only purchase securities that present minimal credit risk as determined by the Investment Manager. The Fund may also invest in one or more government money market funds managed by the Investment Manager or an affiliate thereof that invest in the same types of securities in which the Fund may invest directly. For purposes of satisfying the Fund’s strategy of investing 100% of its total assets in cash and the other types of securities described above, investments in such Underlying BlackRock Funds will be considered as if they are invested in cash and such securities. No hedging or derivatives are permitted in the underlying portfolio.
Detailed holdings are provided to holders upon request.
Yield Considerations: [Please Check out the forum post for this section]
Fee Considerations: [Please Check out the forum post for this section]
Permissioning: Securitize leverages its DS protocol to program asset specific compliance rules into the asset contract to enforce a permissioned environment. The DS protocol is the most widely used and long-standing protocol in the industry to issue compliant tokenized securities on public blockchains. The TA maintains an on-chain “whitelist” of fully onboarded, KYCd and authorized investor wallets able to perform allowable transfers between other whitelisted wallets and/or investors. All investors, whether transacting in the primary or secondary market, must be whitelisted by the TA before receiving or transferring BUIDL tokens.
Shares in the Fund are only being offered to and will only be issued to “professional investors” within the meaning of The Securities and Investment Business Act, 2010 (SIBA). Individual US investors are not accepted as investors of the Fund at this time.
Each investor seeking to invest in the shares must be, among other things:
- an “accredited investor” as defined under Regulation D; AND either:
- A: “qualified purchaser” or a “knowledgeable employee,” in each case as defined under applicable U.S. federal securities laws; OR
- B: Non-U.S. person that is outside the United States at the time the investor acquires the Shares.
Subscription and Redemption Overview: BUIDL allows for several methods of subscription and redemption:
- On the primary market, subscriptions to and redemptions from BUIDL are available via USD, (and if investors are clients of Zero Hash, via USDC conversion facilitated by Zero Hash).
- BUIDL is available to be nearly instantly liquidated to USDC via the Circle liquidity smart contract. (2)
- Whitelisted investors may also acquire or transfer BUIDL tokens through peer to peer transfers on the secondary market 24/7/265, subject to the availability from whitelisted ecosystem participants. (3)
Subscription Timing:
| Column 1 | Column 2 |
|---|---|
| USD | Same day if USD funds are received before 2:30 pm ET on business days; next business day otherwise |
| USDC (4) | Issued on the business day in which USD funds are received to BNY upon USDC conversion by 2:30 PM EST |
| Secondary (3) | Near Instant, 24/7 via whitelisted peer to peer transfer |
Redemption Timing:
| Column 1 | Column 2 |
|---|---|
| USD | Same day wire processing if received before 3:00 pm ET on business days; next business day otherwise |
| USDC (4) | Intra-day via conversion partner |
| Secondary (3) | Near Instant, 24/7 redemptions via Circle liquidity vehicle for Ethereum share class only; Near Instant, 24/7 via whitelisted peer to peer transfer |
All subscription and redemption processes have operated as designed since inception, without any interruptions across a total dollar volume of $1.38B.
Liquidity Vehicles: [Please Check out the forum post for this section]
Tokenholder Rights: BUIDL offers investors non-voting, participating Class A Shares, issued in the form of digital tokens on the public blockchains referenced above. These tokens represent ownership in the fund and allow holders to participate in the economic benefits generated by BUIDL, such as receiving dividend distributions.
Key Parties:
- BlackRock Financial Management, Inc. (BFM), an SEC registered investment adviser, is responsible for the Fund’s investment activities.
- Securitize Markets, LLC, SEC-registered Broker Dealer, currently acts as the sole placement agent for the private placement of the BUIDL tokens by providing a distribution and sales channel for the tokens.
- Securitize, LLC, an SEC-registered transfer agent and technology service provider who serves as the Fund’s transfer agent and service provider in creating and disbursing the tokens on the blockchain. The TA onboards investors, maintains the BUIDL white-list, issues/redeems shares, distributes dividends, and facilitates programmatic transfers of BUIDL shares between investors.
- Bank of New York Mellon acts as the administrator for the Fund and custodian for the Fund’s assets. As the administrator, BNYM performs financial, accounting, corporate, administrative, and other services for the Fund. As the Fund Assets Custodian, BNYM performs custodial services for cash and other non-crypto assets of the Fund delivered to it.
- PricewaterhouseCoopers LLP is the independent auditor of the Fund. Each Shareholder will receive a financial report of the Fund for each fiscal year audited by the Fund’s independent auditor.
- The Fund’s board of directors has overall responsibility for the management, operation, and administration of the Fund. Each person’s bio is further detailed in the Private placement memorandum for the Fund, which may be provided upon request.
Summary: BUIDL brings together an ecosystem of vendors and partners to provide a compelling tokenized US Treasury product available to DeFi. By working with Securitize and BlackRock to use BUIDL as a backing asset for Frax USD, Frax USD will gain exposure to one of the most liquid assets in the world, while still reaping the benefits of yield-bearing, on-chain efficiencies of DeFi.
Supplementary documents:
Voting
- For: Invest in BUIDL as a backing asset for Frax USD
- Against: Do nothing
Off-Chain Vote
Timeline
Dec 26, 2024Proposal created
Dec 26, 2024Proposal vote started
Dec 31, 2024Proposal vote ended
Nov 21, 2025Proposal updated