BlackRock is making moves to expand the use of its digital money-market coin, BUIDL, as collateral for cryptocurrency derivatives trades.
According to sources familiar with the matter shared by Bloomberg, BlackRock and its brokerage partner, Securitize, are engaged in early discussions with some of the largest global crypto exchanges.
These talks are a part of making BUIDL accepted as collateral on platforms such as Binance, OKX, and Deribit.
FalconX and Hidden Road allow usage of BUIDL
The BUIDL token is designed for qualified institutional investors with a minimum investment of $5 million. In a short period, FalconX and Hidden Road, two prominent crypto prime brokers, currently allow their clients to use BUIDL as collateral.
BlackRock’s BUIDL has a management fee of 0.5% and has reached a total circulation of nearly $550 million, according to tracker rwa.xyz.
The cryptocurrency derivatives market is a growing opportunity. In September alone, derivatives accounted for over 70% of total crypto trading volume. Also, an estimated $3 trillion worth of contracts traded on centralized exchanges, as reported by researcher CCData.
Deribit CEO confirmed plans to include BlackRock’s BUIDL
Deribit CEO Luuk Strijers confirmed that they are reviewing several tokens, including BUIDL, for use as collateral. However, he noted that regulatory approval and a deeper understanding of the token’s technical aspects would be necessary before implementation.
BlackRock’s vision could pose a challenge to established players like Tether and Circle if it turns out to be a success.
The BlackRock USD Institutional Digital Liquidity Fund, represented by the BUIDL token, is a tokenized money-market fund. It was launched in March, and like most stablecoins, BUIDL aims to maintain a value of $1.
It invests in instruments such as US Treasury bills, cash, and repurchase agreements. A key differentiator is that BUIDL pays interest to holders. This could potentially enhance its appeal to derivatives traders.
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