Realize T-BILLS Fund launched in Abu Dhabi Global Market

The first tokenised treasury bill fund licensed in the Abu Dhabi Global Market launched on Thursday, with its creators hoping to attract $100 million from

The first tokenised treasury bill fund licensed in the Abu Dhabi Global Market (ADGM) launched on Thursday, aiming to attract $100 million from investors within a year.

Such funds buy United States treasuries, which are US government bonds, and then create a blockchain-based token to represent these assets, thereby enabling digital, fractional ownership that may prove more liquid and accessible.

According to the website rwa.xyz, investment in tokenised treasury funds has soared to more than $2.4 billion worldwide, up from just $105 million at the start of 2023.

These tokenised funds are now held across nearly 8,800 addresses, or accounts, at an average of $275,000 each.

The Realize T-BILLS Fund is launched by Abu Dhabi-based duo Neovision Wealth Management and Realize.

Neovision will manage the fund, while Realize operates the supporting technology.

Speaking to AGBI, Dominik Schiener, Realize’s co-founder, said his target was for the fund to have $100 million in assets under management in 12 months’ time. Of this, he expects 20 to 30 percent will come from investors in the Gulf and the remainder from Europe and Southeast Asia.

“Southeast Asia is going to be the largest demographic for us. We also want to do a lot in the Middle East because it has a high penetration of crypto users and wealthy individuals,” Schiener said.

Arvind Ramamurthy, Abu Dhabi Global Market's chief market development officer, said in a statement announcing the fund’s launch: “As a tokenised investment fund adhering to stringent regulatory standards, it positions the international financial centre of Abu Dhabi as a global leader in real-world asset tokenisation.”

The Realize T-BILLS Fund invests in three-month US treasury bill ETFs (exchange-traded funds) run by BlackRock and State Street Global Advisors.

Its minimum investment is $50,000, and it is open to qualified investors worldwide outside of the United States.

“The fund holds the ETF in custody. The key difference is that instead of having a typical share registry, we have it as tokens,” Schiener said.

“The tokens represent physical and legal ownership in the fund. You can create new markets to trade these tokenised assets, so you have more liquidity and new utility.

“It's not a cryptocurrency, but a security token, because it's backed by the underlying securities, which are treasury bills.”

The fund accepts conventional currency via wire transfer as well as Bitcoin, Ethereum and Iota tokens.

Whether fiat money or crypto, these are then used to buy the ETFs via Swissquote, an online trading platform based in Nyon, Switzerland.

“It automatically gets converted into a token and you receive the token into your wallet,” Schiener said. “So, you have instant liquidity.”

Schiener said the fund’s target investors were wealthy individuals or entities already invested in crypto but who “want to diversify out of volatile crypto towards safer, yield-bearing assets that are collateralised”.

He said he also hoped to attract more conventionally minded investors and family offices that want to obtain exposure to crypto and “leverage their portfolio”.

“Realize's tokenised fund will enable investors to use treasury ETF holdings in new ways that you haven't been able to do with the traditional financial ecosystem, or where it's very expensive to do that,” Schiener said.

“The key innovation is, you can then leverage these tokenised assets in what we call yield vaults. You can take out a loan against the tokens and generate additional yield by acquiring other assets,” he said. “This collateralisation and the instant liquidity, where you can trade treasury bills, will be the most exciting part of this.”

Realize will soon launch an online platform where institutional investors can lend to fund token holders who will use their tokens as collateral.

“The objective for the investor would be to generate a higher yield than what they're paying in interest” on their collateralised borrowings, Schiener said.

“As we give new options to generate yield beyond just the underlying yield of the treasury bills, it gets a lot more attractive for investors,” he said. “We’re already working on two more structures to tokenise different assets. Setting up something for retail investors would be also very interesting.”