The world’s largest asset manager, BlackRock, aims to expand its exposure to the digital asset industry following the successful launch of Bitcoin and Ethereum ETFs in 2024. In a new venture, the American asset manager is trying to push the adoption of its currency-market token BUIDL as a collateral in the crypto derivative market.
BlackRock’s BUIDL to Serve as Derivative Securities: Report
According to a Friday Bloomberg report, BlackRock has begun marketing BUIDL as a security in the crypto derivative market. In context, BUIDL – which stands for BlackRock USD Institutional Digital Liquidity Fund – is a tokenized fund issued on the Ethereum blockchain that gives institutional investors access to earning a yield in US dollars.
Similar to stablecoins, BUIDL is pegged to a stable price of $1 per unit and invests in assets such as US dollars, US treasury bills, and repurchase agreements. After its launch in March, BUIDL experienced impressive growth amassing $550 million in AUM to become the largest token fund in the market.
To facilitate the further growth of BUIDL, Bloomberg says that BlackRock in collaboration with its broker Securitize has started discussions with major exchanges such as Binance, OKX, and Deribit to introduce the money market token as a collateral for derivatives trading respectively. platforms.
BlackRock will aim to charge traders a 0.5% management fee in line with its current standard policy. However, the use of BUIDL is limited to eligible investors with a minimum investment share of $5 million.
Currently, major crypto brokers such as FalconX and Hidden Road have already authorized their clients to use BUIDL as a trading collateral. However, the potential entry into the derivatives market of powerhouses such as Binance and OKX presents a significant opportunity to significantly increase the market impact of token adoption.
BlackRock To Challenge USDT Dominance In Derivatives Trading
When introducing BUIDL to crypto derivatives trading, BlackRock will face strong opposition from Tether’s USDT which ranks as the most common collateral in the crypto derivatives market. USDT is the world’s largest stablecoin and the third largest cryptocurrency with a market cap of 120 billion.
Currently, there are no confirmed comments from BlackRock or crypto exchanges that have mentioned any planned introduction of BUIDL to crypto derivatives exchanges. However, the successful implementation of this program will represent another significant step in the digital assets campaign of the invested company.
BlackRock has already launched the world’s largest Bitcoin and Ethereum ETF with respective assets of $25.79 billion and $1.26 billion according to data from SoSoValue. By acquiring collateral in the crypto derivative market, which generated nearly three-quarters of crypto trading volume in September, BlackRock could expand its reach into the digital assets industry.
Featured image from Investopedia, chart from Tradingview
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