The world’s largest asset manager, BlackRock, aims to expand its foray into the digital assets sector after the successful launch of Bitcoin and Ethereum spot ETFs in 2024. In a new venture, the American asset manager is trying to push the adoption of its silver-market token BUIDL as a collateral asset in the crypto derivatives market.
BlackRock’s BUIDL to serve as derivative collateral: report
According to a report published Friday by Bloomberg, BlackRock 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 offering institutional investors access to US dollar returns.
Similar to stablecoins, BUIDL is tied to a stable value of $1 per unit and invests in assets such as US dollars, US treasuries and repurchase agreements. Following its launch in March, BUIDL has seen remarkable growth, accumulating $550 million in assets under management to become the largest tokenized fund on the market.
To facilitate the future growth of BUIDL, Bloomberg states that BlackRock, together with its broker Securitize, has initiated discussions with major exchanges such as Binance, OKX and Deribit to introduce the money market token as a collateral asset for trading derivative products on their respective markets. platforms.
BlackRock will aim to charge traders a 0.5% management fee, consistent with its current standard policy. However, use of BUIDL is restricted to eligible institutional investors with a minimum investment quota of $5 million.
Currently, prime crypto brokers such as FalconX and Hidden Road have already allowed their clients to use BUIDL as a collateral asset for trading. However, a potential entry into the derivatives market of powerful exchanges such as Binance and OKX presents a significant opportunity to exponentially increase influence in the token discovery market.
BlackRock to Challenge USDT Dominance in Derivatives Trading
By launching BUIDL into crypto derivatives trading, BlackRock will face powerful opposition from Tether’s USDT, which ranks as the most common collateral asset 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 present, there are no confirmatory comments from BlackRock or the mentioned crypto exchanges on the planned introduction of BUIDL into crypto derivatives trading. However, the successful implementation of this initiative would represent another exceptional milestone in the investment firm’s digital asset campaign.
BlackRock already has the largest Bitcoin and Ethereum spot ETFs with respective net assets of $25.79 billion and $1.26 billion according to SoSoValue data. By securing a collateral asset in the crypto derivatives market, which produced nearly three-quarters of crypto trading volume in September, BlackRock could expand its reach in the digital assets sector.
Featured image from Investopedia, chart from Tradingview
