Switzerland-based blockchain protocol, Backed Finance, has introduced a groundbreaking era with the world’s first tokenized government bond on the Base network. This financial instrument is derived from the UCITS of BlackRock’s iShares bond exchange-traded fund (ETF).
Notably, It will be identified by the symbol blB01. This signifies a tokenized iteration of a short-term US Treasury bond ETF. This innovative offering grants investors the ability to monitor its valuation without direct exposure to the underlying asset.
Backed Finance’s core mission is centered on creating real-world assets (RWAs) that can seamlessly integrate into the blockchain ecosystem. The platform operates under the Swiss Distributed Ledger Technology (DLT) Act, allowing it to mint Backed-issued tokens (bTokens).
Additionally, These tokens mirror the value of a diverse range of assets, including treasury ETFs, corporate bond ETFs, and equities. Impressively, these tokenized assets can be freely transferred between different wallets, eliminating the need for physical handling.
Backed Finance Leads the Way as Blockchain ETFs Gain Traction Amid Regulatory Challenges
Backed Finance significant accomplishment aligns with the growing interest in the blockchain and cryptocurrency sphere. Many enterprises are now considering launching ETFs to track prominent cryptocurrencies.
For example, the VanEck Ethereum Strategy Fund (EFUT) serves as a notable case. It obtained approval from the US Securities and Exchange Commission (SEC) and commenced trading on October 3. In a similar vein, Bitwise, an asset management firm, also obtained regulatory approval to introduce Ethereum futures contracts.
However, in the United States, despite its potential as a market for blockchain-backed investments, there has been a noticeable lack of clear regulatory guidelines for the nascent industry. Conversely, the SEC’s proactive approach has driven many crypto businesses to seek more favorable regulatory environments abroad.
Exclusion of US Residents and Investors from RWA Offering on Base Network
In response to this regulatory landscape, Backed Finance has made a significant decision. The company has chosen to exclude residents and investors from the United States from its RWA offering.
They have explicitly stated that they do not intend to register their tokenized financial assets under the US Securities Act of 1933 or any regulatory authority within the nation. This choice is particularly noteworthy because Backed Finance’s RWA initiative operates on the Base network, a layer-2 blockchain solution owned by the US-based cryptocurrency exchange, Coinbase.
When explaining the reasoning for choosing the Base network instead of more traditional options like the Ethereum blockchain, Giorgio Giuliani, the Head of Product at Backed Finance, emphasized several key points.
He highlighted Base’s user-friendly approach for developers and its cost-efficiency, particularly concerning gas fees. This cost-effectiveness applies to both users and developers, especially when compared to the Ethereum network.