Switzerland-based blockchain protocol Backed Finance has made history by launching the first-ever tokenized government bond on the Base network. This groundbreaking financial instrument, identified by the ticker symbol blB01, is a tokenized short-term US Treasury bond ETF extracted from BlackRock’s iShares bond exchange-traded fund (ETF) UCITS.
Tokenizing Real-World Assets with Backed Finance
Backed Finance’s core mission is to create real-world assets (RWAs) that are composable and interoperable with the blockchain ecosystem. Operating on the Swiss Distributed Ledger Technology (DLT) Act, the protocol enables the creation of Backed-issued tokens (bTokens) that accurately track the value of various assets such as treasury ETFs, corporate bond ETFs, and equities.
One of the remarkable features of these tokenized assets is their ease of transfer. They can be seamlessly moved from one wallet to another without any restrictions, providing investors with a digital representation of their RWAs without the burdens of physical handling.
The Increasing Interest in Blockchain and Crypto Space
Backed Finance’s recent milestone aligns with the growing interest in the blockchain and crypto space. Many companies have expressed plans to offer ETFs that track major cryptocurrencies. For example, the VanEck Ethereum Strategy Fund (EFUT) recently received approval from the US Securities and Exchange Commission (SEC) and commenced trading on October 3. Additionally, Bitwise, a fellow asset management firm, obtained regulatory approval to launch its Ethereum futures contracts.
However, while the United States holds promise as a market for blockchain-backed investments, it has lagged in providing clear regulatory guidance for the burgeoning industry. Contrarily, regulatory bodies like the SEC have adopted a more assertive stance, leading several crypto-related businesses and opportunities to relocate overseas.
As a result, Backed Finance explicitly declared that its RWA offering is unavailable to US residents and investors. The protocol does not intend to register its tokenized financial assets under the US Securities Act of 1933 or with any regulatory authority within the country.
Choosing Base Network over Ethereum
Backed Finance’s decision to operate on the Base network, a layer-2 blockchain solution owned by the US-based Coinbase crypto exchange, is significant. The Head of Product, Giorgio Giuliani, explained that the choice was influenced by Base’s developer-friendly nature and the cost-effectiveness of its gas fees compared to the Ethereum network.
