The world’s largest asset manager, BlackRock, aims to expand its reach in the digital asset industry following the successful launch of its spot Bitcoin and Ethereum ETF in 2024. In a new venture, the American asset manager is trying to encourage the adoption of its money-market token BUIDL as a collateral asset in the market crypto derivatives.
BlackRock’s BUIDL To Serve As Derivative Collateral: Report
According to a Friday report by Bloomberg, BlackRock has begun marketing 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 yields in US dollars.
Similar to stablecoins, BUIDL is pegged to a stable value of $1 per unit and invests in assets such as US dollars, US treasuries and repurchase agreements. After launching in March, BUIDL has experienced tremendous growth, raising $550 million in AUM to become the largest token fund on the market.
To facilitate further growth of BUIDL, Bloomberg stated that BlackRock along with its broker Securitize have initiated discussions with major exchanges such as Binance, OKEx, and Deribit to introduce money market tokens as collateral assets for derivatives trading on their respective exchanges. platforms.
BlackRock will charge traders a management fee of 0.5% in accordance with its current standard policy. However, use of BUIDL is limited to qualified institutional investors with a minimum investment quota of $5 million.
Currently, major crypto brokers such as FalconX and Hidden Road have allowed their customers to use BUIDL as collateral assets for trading. However, the potential entry into the derivatives markets of powerhouse exchanges such as Binance and OKEx presents a significant opportunity to exponentially increase the market impact of tokenized findings.
BlackRock Will Challenge USDT Dominance In Derivatives Trading
In launching BUIDL in crypto derivatives trading, BlackRock will encounter strong resistance from Tether’s USDT which ranks as the most common asset for 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 are no confirmatory comments from BlackRock or any of the mentioned crypto exchanges regarding the planned introduction of BUIDL in crypto derivatives trading. However, the successful implementation of this initiative will represent another important milestone in the investment firm’s digital asset campaign.
BlackRock has come up with the largest spot Bitcoin and Ethereum ETFs with net assets of $25.79 billion and $1.26 billion respectively according to data from SoSoValue. By securing collateral assets in the crypto derivatives market, which accounted for nearly three-quarters of crypto trading volume in September, BlackRock can expand its reach in the digital asset industry.
Featured image from Investopedia, chart from Tradingview
