The world’s largest asset manager, BlackRock, aims to expand its foray into the digital asset industry following the successful launch of Bitcoin and Ethereum spot ETFs in 2024. In a new venture, the American asset manager is attempting Drive adoption of your money. BUIDL market token as a collateral asset in the crypto derivatives market.
BlackRock’s BUIDL to serve as derivative collateral: report
According to a Bloomberg Friday ReportBlackRock has begun trading BUIDL as collateral in the crypto derivatives market. For context, BUIDL, which stands for BlackRock USD Institutional Digital Liquidity Fund, is a tokenized fund issued on the Ethereum blockchain that offers institutional investors access to achieve returns in US dollars.
Like 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. Following its launch in MarchBUIDL has seen remarkable growth, accumulating $550 million in AUM to become the largest tokenized fund in the market.
To facilitate further growth of BUIDL, Bloomberg claims that BlackRock, together with its broker Securitize, has initiated talks with major exchanges such as Binance, OKX and Deribit to introduce the money market token as a collateral asset for derivatives trading on their respective platforms.
BlackRock will seek to charge traders a 0.5% management fee, in line with its current standard policy. However, the use of BUIDL is only restricted to eligible institutional investors with a minimum investment fee of $5 million.
Currently, cryptocurrency brokers such as FalconX and Hidden Road have already authorized their clients to use BUIDL as collateral for trading. However, a possible entry into the derivatives market by powerful exchanges such as Binance and OKX presents a significant opportunity to exponentially increase the market influence of the tokenized find.
BlackRock to challenge USDT dominance in derivatives trading
By launching BUIDL in crypto derivatives trading, BlackRock will experience powerful opposition from Tether’s USDT, which ranks as the most common asset as collateral in the crypto derivatives market. USDT is the world’s largest stablecoin and the third largest cryptocurrency with a market capitalization of $120 billion.
Currently, there is no confirmatory comment from BlackRock or the mentioned crypto exchanges regarding any planned introduction of BUIDL into crypto derivatives trading. However, the successful execution of this initiative would represent another notable milestone in the investment firm’s digital asset campaign.
BlackRock already presents the largest detect bitcoin and Ethereum ETFs with respective net assets of $25.79 billion and $1.26 billion according to SoSoValue data. By gaining a collateral asset in the crypto derivatives market, which produced nearly three-quarters of cryptocurrency trading volume in September, BlackRock could expand its reach in the digital asset industry.
Featured image from Investopedia, chart from Tradingview
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