BlackRock, renowned as the world’s largest asset manager, is ambitiously expanding its footprint in the digital asset industry. Following the successful launch of spot Bitcoin and Ethereum ETFs in 2024, the American financial giant is now setting its sights on a new frontier—introducing its money-market token, BUIDL, as a collateral asset within the crypto derivative market. This strategic move could further cement BlackRock’s position as a leader in the evolving landscape of digital finance.
BlackRock’s BUIDL to Transform Derivative Collateral Landscape
According to a recent report by Bloomberg, BlackRock has initiated efforts to market BUIDL as a viable collateral option in the crypto derivative market. BUIDL, which stands for BlackRock USD Institutional Digital Liquidity Fund, is a tokenized fund built on the Ethereum blockchain. This innovative financial instrument provides institutional investors with an opportunity to achieve returns on US dollar yields, akin to the stability offered by traditional stablecoins.
Mirroring the attributes of stablecoins, BUIDL maintains a stable value of $1 per unit. It accomplishes this by investing in a mix of secure assets, such as US dollars, US treasury bills, and repurchase agreements. Since its launch in March, BUIDL has achieved remarkable growth, accumulating $550 million in assets under management (AUM), making it the largest tokenized fund available in the market today.
To further accelerate the adoption of BUIDL, Bloomberg reports that BlackRock, alongside its broker Securitize, is actively engaging with major crypto exchanges including Binance, OKX, and Deribit. The goal is to integrate BUIDL as a collateral asset for derivative trading on these prominent platforms. By doing so, BlackRock aims to provide traders with a secure and efficient solution for collateralization in the increasingly competitive crypto landscape.
In line with its standard policy, BlackRock plans to levy a management fee of 0.5% on traders utilizing BUIDL. However, it’s important to note that the use of BUIDL is currently limited to eligible institutional investors, each required to meet a minimum investment threshold of $5 million. Notably, crypto prime brokers like FalconX and Hidden Road have already authorized their clients to employ BUIDL as collateral for trading, paving the way for its potential dominance in the derivatives market.
Challenging USDT’s Dominance: BlackRock’s Strategic Play
As BlackRock embarks on introducing BUIDL to the crypto derivative trading arena, it is poised to encounter formidable competition from Tether’s USDT. Currently, USDT stands as the most widely-used asset for collateral in the crypto derivative market. With a staggering market capitalization of $120 billion, USDT is not only the world’s largest stablecoin but also the third-largest cryptocurrency overall.
While no official statements have been made by BlackRock or the mentioned crypto exchanges regarding the introduction of BUIDL in crypto derivative trading, the successful realization of this initiative would mark a significant milestone in BlackRock’s digital asset campaign. With an established presence through its Bitcoin and Ethereum ETFs, which boast net assets of $25.79 billion and $1.26 billion respectively, BlackRock is well-positioned to further expand its reach in the digital asset sector.
The crypto derivative market, which accounted for nearly three-quarters of crypto trading volume as of September, presents an immense opportunity for BlackRock to solidify its influence. By securing BUIDL as a collateral asset, the firm could enhance its strategic positioning and capture a larger share of the burgeoning digital asset industry, which is currently valued at $2.293 trillion globally.
