Backed Finance Launches Tokenized Government Bond on Base Network

Backed Finance, a blockchain protocol based in Switzerland, has introduced the world’s first tokenized government bond on the Base network. This financial instrument, derived from BlackRock’s iShares bond exchange-traded fund (ETF) UCITS, will be recognized by the ticker symbol blB01. It represents a tokenized version of a short-term US Treasury bond ETF, enabling investors to track its value without direct exposure to the asset.

Backed Finance’s primary mission is to create real-world assets (RWAs) that can seamlessly integrate with the blockchain ecosystem. Operating under the Swiss Distributed Ledger Technology (DLT) Act, it can generate Backed-issued tokens (bTokens) that mirror the value of various assets such as treasury ETFs, corporate bond ETFs, and equities. Impressively, these tokenized assets can be freely transferred between different wallets, eliminating the need for physical handling.

This achievement by Backed Finance aligns with the growing interest in the blockchain and crypto space, where many companies are planning to introduce ETFs to track major cryptocurrencies. An example of this trend is the VanEck Ethereum Strategy Fund (EFUT), which received approval from the US Securities and Exchange Commission (SEC) and commenced trading on October 3. Similarly, Bitwise, an asset management firm, obtained approval to launch Ethereum futures contracts from the regulatory body.

However, despite the United States showing promise as a market for blockchain-backed investments, it has been noticeably hesitant in providing clear regulatory guidance for the burgeoning industry. In contrast, regulatory bodies like the SEC have taken a more assertive stance, leading many crypto-related businesses and opportunities to relocate abroad.

In response to this regulatory landscape, Backed Finance has made the notable decision to exclude US residents and investors from its RWA offering. The company clarified that it has no intention of registering its tokenized financial assets under the US Securities Act of 1933 or with any regulatory authority in the country. This decision is noteworthy, considering that Backed Finance’s RWA initiative operates on the Base network, a layer-2 blockchain solution owned by the US-based Coinbase crypto exchange.

Explaining the preference for the Base network over more conventional options like the Ethereum blockchain, Giorgio Giuliani, the Head of Product at Backed Finance, emphasized Base’s developer-friendly approach and cost-effectiveness in terms of gas fees for users and developers compared to the Ethereum network.