BlackRock, the world’s largest asset manager, aims to expand its footprint in the digital assets industry following the successful launch of Bitcoin and Ethereum ETFs in 2024. In a new venture, the US asset manager is trying to push the adoption of its funds. Market token BUIDL as an additional asset in the cryptocurrency derivatives market.
BlackRock’s BUIDL as derivative guarantees: report
According to A Friday report from BloombergBlackRock has begun marketing BUIDL as a security in the cryptocurrency derivatives market. For context, BUIDL – which stands for BlackRock USD Institutional Digital Liquidity Fund – is a tokenized fund issued on the Ethereum blockchain providing institutional investors with access to earning returns in US dollars.
Similar to stablecoins, BUIDL is pegged to a fixed value of $1 per unit and invested in assets such as the US dollar, US Treasury bills, and repurchase agreements. After its launch in March, BUIDL has seen significant growth, amassing $550 million in assets under management to become the largest tokenized fund in the market.
In order to facilitate further growth of BUIDL, Bloomberg reported that BlackRock in conjunction with its broker Securitize has initiated discussions with major exchanges such as Binance, OKX and Deribit to offer the money market token as a collateral asset for derivatives trading on each of them. Platforms.
BlackRock will aim to charge traders a 0.5% management fee in line with its current standard policy. However, use of BUIDL is limited only to qualified institutional investors with an investment stake of at least $5 million.
Currently, major cryptocurrency brokers such as FalconX and Hidden Road allow their clients to use BUIDL as a collateral asset for trading. However, the potential entry into the derivatives market of powerful exchanges such as Binance and OKX represents a great opportunity to significantly increase the market influence of token discovery.
BlackRock challenges USDT’s dominance in derivatives trading
When launching BUIDL in cryptocurrency derivatives trading, BlackRock will face strong opposition from Tether’s USDT which ranks as the most popular collateral asset in the cryptocurrency derivatives market. USDT is the world’s largest stablecoin and the third largest cryptocurrency with a market capitalization of $120 billion.
At the moment, there are no confirmed comments from BlackRock or the mentioned cryptocurrency exchanges regarding any planned rollout of BUIDL in cryptocurrency derivatives trading. However, the successful implementation of this initiative will mark another milestone in the investment firm’s digital assets campaign.
BlackRock already offers the largest Bitcoin and Ethereum ETFs with net assets respectively of $25.79 billion and $1.26 billion according to Data from SoSoValue. By securing additional assets in the cryptocurrency derivatives market, which generated nearly three-quarters of cryptocurrency trading volume in September, BlackRock can expand its reach in the digital assets industry.
Featured image from Investopedia, chart from Tradingview