BlackRock’s iShares Short Maturity Municipal Bond ETF, known as MEAR, has recently made history by venturing into the world of blockchain technology. The ETF made a groundbreaking move by purchasing municipal bonds that were issued and settled entirely on the blockchain.
The municipal bonds were issued by Quincy, Massachusetts in April and were sold using JPMorgan Chase’s private blockchain platform. This innovative deal handled everything from issuance to settlement on the blockchain, completely bypassing traditional methods.
The transaction with Quincy involved $6.5 million in municipal debt, a significant move for BlackRock, a major player in the financial industry. A spokesperson from BlackRock mentioned that this transaction was part of their actively managed ETF, MEAR, which currently holds $750 million in client assets and has been operating since 2015.
The city of Quincy made headlines earlier this year when it decided to issue bonds using blockchain technology instead of the traditional system. JPMorgan’s blockchain platform, Digital Debt Service, played a pivotal role in this groundbreaking innovation. The platform streamlined the entire process, eliminating intermediaries and making the process faster and more efficient. The bonds remained on the blockchain from issuance to settlement, marking a significant milestone in municipal finance.
BlackRock was the first major player to participate in the Quincy deal. The firm updated its ETF’s prospectus to allow for blockchain-based bond investments, requiring a filing with the U.S. Securities and Exchange Commission. The filing outlined potential risks, such as limited liquidity and the possibility of bugs or errors in the blockchain application. Despite these risks, the use of blockchain technology in municipal finance has shown promise in reducing paperwork and delays traditionally associated with municipal bonds.
In addition to its venture into blockchain-based municipal bonds, BlackRock’s iShares Bitcoin Trust (IBIT) has been experiencing significant success. The trust, launched earlier this year, has been breaking records with over $51 billion in assets under management. In just one day, IBIT saw $740 million in inflows, surpassing even BlackRock’s gold ETF.
Investors are showing strong interest in IBIT, with market watchers predicting further growth in the cryptocurrency market. Bitcoin’s price trading above $108,000 has fueled investor interest, with expectations of reaching $110,000 soon. BlackRock’s foray into blockchain technology and cryptocurrency ETFs showcases the firm’s commitment to innovation in the financial industry.