In a new venture, BlackRock is reportedly aiming to push the adoption of its money-market token BUIDL as a collateral asset in the crypto derivative market.
According to a Friday report by Bloomberg, BlackRock has begun marketing BUIDL as collateral on crypto derivative platforms. Although there are no confirmative comments from BlackRock or the mentioned crypto exchanges on any planned introduction of BUIDL in crypto derivative trading, the successful execution of this initiative would represent another significant milestone in the investment firm’s digital asset campaign.
BlackRock already presents the largest spot Bitcoin and Ethereum ETFs, with respective net assets of $25.79 billion and $1.26 billion, according to data from SoSoValue. However, the use of BUIDL is restricted to eligible institutional investors with a minimum investment quota of $5 million. Similar to stablecoins, BUIDL is pegged to a stable value of $1 per unit and invests in assets such as US dollars, US treasury bills, and repurchase agreements.
Since its launch in March, BUIDL has experienced remarkable growth, amassing $550 million in Assets Under Management (AUM) to become the largest tokenized fund in the market. BlackRock will face strong competition from Tether’s USDT, which ranks as the most common asset for collateral in the crypto derivative market.
USDT is the world’s largest stablecoin and the third-largest cryptocurrency, with a market cap of $120 billion.
BlackRock, the world’s largest asset manager, is reportedly preparing to expand its presence in the digital asset industry, following the successful launch of spot Bitcoin and Ethereum Exchange-Traded Funds (ETFs) in 2024. BUIDL is a tokenized fund issued on the Ethereum blockchain, offering institutional investors access to US dollar yields. Currently, crypto prime brokers such as FalconX and Hidden Road have already authorized their customers to use BUIDL as a collateral asset for trading.
However, a potential entry into the derivatives market of powerhouse exchanges such as Binance and OKX presents a significant opportunity to exponentially boost the market influence of the tokenized fund. By securing a collateral asset in the crypto derivative market, which produced nearly three-quarters of crypto trading volume in September, BlackRock could expand its reach in the digital asset industry.
To facilitate further growth of BUIDL, BlackRock, in conjunction with its broker Securitize, has begun discussions with major exchanges such as Binance, OKX, and Deribit, to introduce the money-market token as a collateral asset for derivative trading on their respective platforms.
BlackRock will aim to charge traders a management fee of 0.5%, in line with its current standard policy.
