The world’s largest asset manager, BlackRock, is looking to expand its business in the digital asset sector following the successful launch of spot Bitcoin and Ethereum ETFs in 2024. In a new venture, the US asset manager is looking to boost the adoption of its money market token BUIDL as collateral the crypto derivatives market.
BlackRock’s BUIDL will serve as collateral for derivatives: report
According to one Friday report from BloombergBlackRock has started 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 and provides institutional investors with access to earning 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 government bonds and repurchase agreements. Next its launch in MarchBUIDL has experienced remarkable growth, amassing $550 million in assets under management to become the largest tokenized fund on the market.
To enable further growth of BUIDL, Bloomberg states that BlackRock, in partnership with its broker Securitize, has initiated discussions with major exchanges such as Binance, OKX and Deribit to introduce the money market token as collateral for derivatives trading on their respective markets. platforms.
BlackRock aims to charge traders a 0.5% management fee, in line with its current standard policy. However, the use of BUIDL is only limited to eligible institutional investors with a minimum investment quota of $5 million.
Currently, crypto prime brokers such as FalconX and Hidden Road have already authorized their clients to use BUIDL as collateral for trading. However, a potential entry into the derivatives market of major exchanges such as Binance and OKX offers a significant opportunity to exponentially increase the market influence of the tokenized find.
BlackRock will challenge USDT’s dominance in derivatives trading
In launching BUIDL into crypto derivatives trading, BlackRock will face strong opposition from Tether’s USDT, which ranks as the most widely used 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.
At this time, there have been no affirmative comments from BlackRock or the crypto exchanges mentioned regarding a planned introduction of BUIDL into crypto derivatives trading. However, the successful execution of this initiative would mark a new milestone in the investment firm’s digital asset campaign.
BlackRock is already presenting 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 in the crypto derivatives market, which produced nearly three-quarters of crypto trading volume in September, BlackRock could expand its reach in the digital asset industry.
Featured image from Investopedia, chart from Tradingview