The world’s largest asset manager, BlackRock, goals to expand its foray within the digital asset industry following the successful launch of spot Bitcoin and Ethereum ETFs in 2024. In a latest enterprise, the American asset manager is attempting to push the adoption of its money-market token BUIDL as a collateral asset within the crypto derivative market.

BlackRock’s BUIDL To Serve As Derivative Collateral: Report

In keeping with a Friday report by Bloomberg, BlackRock has begun marketing BUIDL as collateral within the crypto derivative 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 achieving US dollar yields.

Much like stablecoins, BUIDL is pegged to a stable value of $1 per unit and invests in assets corresponding to US dollars, US treasury bills, and repurchase agreements. Following its launch in March, BUIDL has experienced remarkable growth amassing $550 million in AUM to change into the most important tokenized fund out there. 

With a purpose to facilitate further growth of BUIDL, Bloomberg states that BlackRock along side its broker Securitize has begun discussions with major exchanges corresponding to Binance, OKX, and Deribit to introduce the money-market token as a collateral asset for derivative trading on their respective platforms. 

BlackRock will aim to charge traders a management fee of 0.5% in step with its current standard policy. Nonetheless, the usage of BUIDL is barely restricted to eligible institutional investors with a minimum investment quota of $5 million.

Currently, crypto prime brokers corresponding to FalconX and Hidden Road have already authorized their customers to make use of BUIDL as a collateral asset for trading. Nonetheless, a possible entry into the derivatives market of powerhouse exchanges corresponding to Binance and OKX presents a major opportunity to exponentially increase the market influence of the tokenized find.

BlackRock To Challenge USDT Dominance In Derivative Trading 

In launching BUIDL within the crypto derivative trading, BlackRock will experience powerful opposition from Tether’s USDT which ranks as essentially the most common asset for collateral within the crypto derivative market. USDT is the world’s largest stablecoin and third-largest cryptocurrency with a market cap of $120 billion. 

At present, there are not any confirmative comments from BlackRock or the mentioned crypto exchanges on any planned introduction of BUIDL in crypto derivative trading. Nonetheless, the successful execution of this initiative would represent one other outstanding milestone within the investment firm’s digital asset campaign.

BlackRock already presents the most important spot Bitcoin and Ethereum ETFs with respective net assets of $25.79 billion and $1.26 billion in line with data from SoSoValue. By securing a collateral asset within the crypto derivative market, which produced nearly three-quarters of crypto trading volume in September, BlackRock could expand its reach within the digital asset industry.

Featured image from Investopedia, chart from Tradingview