BlackRock ETF takes first bite of blockchain-based muni debt

BlackRock ETF takes first bite of blockchain-based muni debt
The world's largest asset manager claims leadership as the first investor to buy a piece of the first-of-its-kind municipal bond issuance.
DEC 18, 2024
By  Bloomberg

A BlackRock Inc. fund has bought municipal debt issued earlier this year in a first-of-its-kind deal that relies exclusively on blockchain technology.

BlackRock purchased the bonds through an actively-managed exchange-traded fund called the iShares Short Maturity Municipal Bond Active ETF or MEAR, according to a spokesperson for the firm. The fund was founded in 2015 and has roughly $750 million in client assets. 

The securities were issued by the city of Quincy, Massachusetts, in April and underwriter JPMorgan Chase & Co. used an application on its private, permissioned blockchain-based platform to facilitate the sale. It was first deal where muni debt was purchased, settled and held all in blockchain on the platform.

BlackRock is the first investor to purchase a portion of the deal, the company said. The ETF lists holdings including a total position of $6.5 million in the Quincy deal, according to data compiled by Bloomberg. 

“The use of blockchain throughout the lifecycle of bonds is just one example of the potential for this technology to transform capital markets,” said Pat Haskell, head of the municipal bond group at BlackRock. “This transaction marks a significant moment for the municipal bond market and is a testament to BlackRock’s dedication to innovation.”

The prospectus for MEAR was updated to allow the fund to invest in muni bonds settled on JPMorgan’s application Digital Debt Service, according to US Securities and Exchange Commission filing dated Dec. 17. Risks disclosed to investors include lack of liquidity and the potential for errors, bugs or limitations in the application’s underlying computer code.

A handful of issuers and underwriters have been testing the muni market’s appetite for using blockchain technology in recent years. The Michigan State University board of trustees also considered a deal that would have been registered on a proprietary digital assets platform provided by Goldman Sachs.  

Latest News

SEC Says Game Service Roblox Part of ‘Active Investigation’
SEC Says Game Service Roblox Part of ‘Active Investigation’

Short sellers previously said the company was under investigation, though Roblox denied allegations.

Musk’s DOGE descends on CFPB with intention to shut it down
Musk’s DOGE descends on CFPB with intention to shut it down

The Consumer Financial Protection Bureau is in the crosshairs of the Republican group that is widely attempting to dismantle government agencies.

Advisor fighting Finra banishment loses $17.7 million dispute with old firm
Advisor fighting Finra banishment loses $17.7 million dispute with old firm

National Securities Corp. sued the advisor in 2020, alleging breach of contract and unjust enrichment.

Job numbers, inflation leaving room for Fed to hold rates
Job numbers, inflation leaving room for Fed to hold rates

Recent data support a measured pace by the Federal Reserve for the year ahead.

Private assets remain hot despite surging stock market
Private assets remain hot despite surging stock market

Financial advisors are still adding alternatives despite the surge in publicly traded stock prices

SPONSORED Taylor Matthews on what's behind Farther's rapid growth

From 'no clients' to reshaping wealth management, Farther blends tech and trust to deliver family-office experience at scale.

SPONSORED Why wealth advisors should care about the future of federal tax policy

Blue Vault features expert strategies to harness for maximum client advantage.