BlackRock's BUIDL fund targets institutional investors with a $5 million minimum investment.
Key Takeaways
- BUIDL token by BlackRock aims to simplify crypto derivatives trading by serving as a new form of collateral.
- BUIDL's adoption by major exchanges could challenge the dominance of traditional stablecoins like USDT.
BlackRock is advancing into the crypto derivatives market by integrating its tokenized money-market fund, BUIDL, as collateral for crypto trades, according to a report by Bloomberg.
The asset management giant is in discussions with major crypto exchanges, including Binance, OKX, and Deribit, aiming to expand BUIDL’s use in derivatives.
Already accepted by prime brokers FalconX and Hidden Road, BUIDL’s adoption could challenge dominant stablecoins like USDT and USDC in collateral markets.
With a minimum investment of $5 million, BlackRock’s BUIDL token is designed for institutional investors. By having it accepted as collateral, BlackRock aims to provide a highly liquid and secure alternative for derivatives traders.
This could shake up the current dominance of USDT, which holds a market value of $120 billion and is the most commonly used collateral in crypto derivatives.
BlackRock launched its BUIDL token in March 2024 as part of its USD Institutional Digital Liquidity Fund. The token is a blockchain-based representation of a traditional money-market fund that invests in assets like US Treasury bills and repurchase agreements.
BUIDL distinguishes itself from other stablecoins by offering interest to holders, making it an attractive option for institutional investors seeking both yield and security.
If exchanges like Binance, OKX, and Deribit integrate BUIDL, the token could become a standard for institutional collateral, providing a regulated, yield-bearing alternative to existing stablecoins.
In addition to its focus on BUIDL, BlackRock has been actively leading the Bitcoin ETF space. Since the start of October alone, BlackRock has acquired over $2.2 billion worth of Bitcoin, accounting for 8% of their total Bitcoin holdings.
BlackRock’s leadership in acquiring Bitcoin spot ETFs is set to expand their influence across both spot and derivatives markets. The integration of BUIDL as collateral for derivatives trades could complement their Bitcoin strategy, allowing for a diversified presence across crypto markets.