Fireblocks acquires asset tokenization firm BlockFold to support large banks

Fireblocks acquires asset tokenization firm BlockFold to support large banks

Digital asset custody and infrastructure firm Fireblocks Inc. announced today that it has acquired the Melbourne-based smart contract development firm BlockFold that helps large banks and financial institutions with the tokenization of financial assets.

The deal, which actually closed Sept. 1, is intended to help Fireblocks expand its tokenization capabilities, which allow traditional assets, such as stocks, bonds, real estate and other financial instruments, to be turned into virtual assets that can be traded using blockchain technology. Once tokenized into virtual assets, they can be represented using digital tokens, which allow them to be tracked, itemized, bought, sold, traded and audited.

BlockFold serves leading financial institutions with projects that require flexible and customizable solutions involving tokenizing money, including deposits, stablecoins and central bank digital currencies, and tokenizing assets such as carbon credits, real estate and investment funds. Some of its clients include the Bank of International Settlements, Swiss National Bank, Banque de France, Singapore’s Ministry of Finance, Tel Aviv Stock Exchange, National Australia Bank and ANZ Bank. Many of whom are also Fireblocks customers.

Michael Shaulov, co-founder and chief executive of Fireblocks, told SiliconANGLE in an interview that BlockFold was chosen because the two companies have been working closely together on numerous high-profile projects with top-tier financial institutions.

“BlockFold has a very talented team of Solidity developers who develop smart contracts that represent the assets. On top of that they have the ability to customize other financial infrastructure for those users,” Shaulov said. “So, it made sense for us to join forces so we could deliver a unified solution for customers.”

Tokenization has seen rapid growth in demand from customers at Fireblocks. It has seen a 350% increase in projects between 2022 and 2023, 75% of them involving large-scale financial institutions on the platform that are exploring the capacity. According to a report from Boston Consulting Group, tokenized assets will represent 10% of all financial assets and grow into a $16 trillion financial market by 2030.

In a lot of cases, Shaulov said, most financial institutions have a business idea that they want to implement on the blockchain but do not know how to get there, so they approach Fireblocks.

“By merging with BlockFold we are able to come in and provide a one-stop-shop solution,” he said. “We are able to do some advisory and business analysis, and include custody, security, management and interaction. We can also design the token, and go all the way up to design the entire decentralized market infrastructure, for example, with automated market makers, swap protocols, and things like that.”

The key idea, he said, allows Fireblocks allows clients to have a single focal point for the management for long term projects that involve digital asset management from inception to completion.

In May, Fireblocks worked with the Tel Aviv Stock Exchange and the Israeli Ministry of Finance to tokenize and settle a government bond on a blockchain network following a live auction among five domestic and seven global banks. As the sole issuers of these government bonds, both parties can now tokenize this type of government debt and distribute it using the Fireblocks platform.

By bringing BlockFold in-house, Fireblocks can now better service top-tier financial institutions with their complex tokenization projects and get their new assets on the blockchain. It will allow Fireblocks to tailor its approach to the market and better serve its clients needs as they change.

As for the future, Shaulov said tokenization is where the most value will come out of the crypto market. “The exponential increase in the market cap and activity on blockchains in the crypto space will now come from blockchain, it will not come from more crypto tokens,” he said. “I think that part has been somewhat exhausted. It will come from tokenized deposits, stablecoins, bonds and even nonfinancial assets such as tickets getting onto the blockchain. This is going after an order-of-magnitude bigger pie than crypto tokens can provide.”

Even with this acquisition, Fireblocks will continue to work with tokenization partners such as Bitbond, Securitize and Tokeny for specific customer use cases as the need arises.

Learn more: SiliconAngle

    Newsletter | Every weekday

    Smart Central News Weekly Briefing

    Only top industry news of the week in your inbox