BlackRock, a top Bitcoin ETF issuer, has made known its plan with Securitize to integrate its money-market digital token called BUIDL token—BlackRock USD Institutional Digital Liquidity Fund, into the top crypto derivatives trading exchanges.
Push for BUIDL as Collateral
BlackRock aims to have its BUIDL token, which represents a money-market fund, used as collateral in crypto derivatives trading platforms like Binance, OKX and Deribit. This would expand BUIDL’s competition with stablecoins like Tether’s USDT known to serve this purpose.
According to CCData, over 70% of the total cryptocurrency trading volume in September came from derivatives (contracts based on the price of other assets). This market saw about $3T in trading volume on centralized exchanges during September.
Read Also: Ethena Labs launches new UStb stablecoin backed by BlackRock’s BUIDL
BUIDL’s Existing Usage
The BUIDL token is already accepted as collateral by two major crypto brokers—FalconX and Hidden Road. However, it’s restricted to institutional investors and requires a minimum investment of $5M.
As of October 18, BUIDL has a market value of $547.7M. This makes it one of the most significant tokenized assets on the blockchain, meaning traditional assets are represented as digital tokens.
The fund behind BUIDL mostly invests in US Treasury and other liquid assets. Bank of New York (BNY) facilitates the connection between digital and traditional financial markets.
CFTC Subcommittee Decision
On October 3, a subcommittee of the Commodity Futures Trading Commission (CFTC) voted to recommend allowing digital assets (such as BUIDL) to be used as collateral in commodities and derivatives trading.
If approved, brokers could use digital tokens like BUIDL and stablecoins as collateral in traditional financial markets.
Other examples of onchain tokenized asset includes Franklin Templeton’s OnChain US Government Money Fund (FOBXX), which is another popular tokenized asset on Wall Street.
According to data on Dune Analytics, the market capitalization of tokenized securities is $1.7B at the time of this writing.
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