BlackRock’s ETF Makes Historic Blockchain-Settled Municipal Bond Purchase
According to the latest Bloomberg BlackRock’s iShares Short-Term Municipal Bond ETF, also known as MEAR, just made a historic purchase of municipal bonds issued and settled entirely on the blockchain, reports say. The fund was established in 2015 and has approximately $750 million in client assets.
The securities were issued in April by the city of Quincy, Mass., and underwriter JPMorgan Chase & Co. used an application on its private, permissioned blockchain platform to facilitate the sale. Notably, this is the first transaction to buy, settle and hold municipal bonds on the platform on a blockchain, completely bypassing traditional methods.
$6.5M deal!
BlackRock was the first investor to buy part of the deal. The Quincy deal involves BlackRock’s purchase of $6.5 million in municipal debt.
Notably, the city of Quincy caused a stir earlier this year when it used blockchain technology instead of traditional systems to issue bonds. JPMorgan’s blockchain platform Digital Debt Services is at the heart of this innovation.
“Using blockchain throughout a bond’s life cycle is just one example of this technology’s potential to transform capital markets,” said Pat Haskell, head of BlackRock’s municipal bond group. “This transaction marks a milestone for the municipal bond market An important moment for BlackRock and a testament to BlackRock’s commitment to innovation.”
According to a Dec. 17 SEC filing, MEAR’s prospectus has been updated to allow the fund to invest in municipal bonds settled by J.P. Morgan’s Digital Debt Services application. The company updated the ETF’s prospectus to allow blockchain-based bond investments. This requires a filing with the U.S. Securities and Exchange Commission, which also outlines risks such as limited liquidity and the possibility of errors or bugs in blockchain applications.
Some issuers and underwriters have been exploring the use of blockchain technology in the municipal market. For example, the Michigan State University Board of Trustees considered registering a deal on a digital platform provided by Goldman Sachs.
IBIT breaks records
BlackRock’s iShares Bitcoin Trust (IBIT), launched earlier this year, is breaking records. IBIT attracted $740 million in inflows over the past day. It currently manages more than $51 billion in assets, making it one of the fastest-growing ETFs in history. In the past 24 hours alone, IBIT took in $740 million. Combined with inflows from the Ethereum ETF, BlackRock’s crypto ETF hit $860 million in one day.
