BlackRock, recognized as the largest asset manager globally, is looking to enhance its presence in the digital asset sector after the successful debut of its Spot Bitcoin and Ethereum ETF in 2024. Various asset management firms in the US are working to leverage their capital as a new revenue stream by marketing their asset BUIDL as a collateral option in the virtual currency derivatives space.
BlackRock’s BUIDL: A New Player in Derivative Collateral
According to a report from Bloomberg, BlackRock has begun offering BUIDL as collateral in the cryptocurrency derivatives arena. BUIDL, which stands for BlackRock USD Institutional Digital Liquidity Fund, is a tokenized fund on the Ethereum blockchain, designed to grant institutional investors access to US dollar yields.
Similar to stablecoins, BUIDL maintains a fixed value of $1 per token and invests in secure assets like the U.S. dollar, U.S. Treasury bills, and repurchase agreements. Since its introduction in March, BUIDL has seen significant growth, accumulating $550 million in assets under management, positioning it as the largest tokenized fund available.
To boost BUIDL’s expansion, BlackRock is partnering with broker Securitize to provide major exchanges, including Binance, OKX, and Deribit, with access to collateral assets for derivatives trading. Discussions are also underway to create a money market token platform.
BlackRock is looking to impose a 0.5% management fee for traders, maintaining consistency with its existing policies. However, access to BUIDL is exclusively available to qualified institutional investors, who must meet a minimum investment threshold of $5 million.
Currently, crypto prime brokers such as FalconX and Hidden Road have permitted their clients to use BUIDL as collateral for trades. Nonetheless, the potential participation of major exchanges like Binance and OKX could significantly boost the market presence of tokenized assets.
BlackRock Takes on USDT’s Market Stronghold
As BlackRock rolls out BUIDL for crypto derivatives trading, it will encounter tough competition from Tether’s USDT, which currently reigns as the predominant collateral asset in this market. USDT, holding the title of the world’s largest stablecoin, boasts a market capitalization of $120 billion, making it the third-largest cryptocurrency overall.
To date, BlackRock and the aforementioned crypto exchanges have not publicly commented on the plans to incorporate BUIDL into cryptocurrency derivatives trading. If successfully implemented, this initiative could represent a significant achievement in BlackRock’s digital asset strategy.
BlackRock has also launched the largest Spot Bitcoin ETF and Ethereum ETF, with net assets totaling $25.79 billion and $1.26 billion, respectively, based on SoSoValue data. By obtaining collateral in the crypto derivatives sector—which accounted for nearly 75% of trading volume in September—BlackRock may enhance its influence in the digital asset landscape.
Image credit: Investopedia, chart sourced from Tradingview
