The world’s largest asset manager, BlackRock, is looking to expand its presence in the digital asset industry following the successful 2024 launch of Bitcoin and Ethereum spot ETFs. As part of a up-to-date venture, the American asset manager is trying to force the adoption of its money – the BUIDL market token as a security asset in the cryptocurrency derivatives market.
BlackRock’s BUIDL is intended to serve as a derivative security: report
According to A Bloomberg’s Friday reportBlackRock began marketing BUIDL as a security in the cryptocurrency derivatives market. For context, BUIDL – or BlackRock USD Institutional Digital Liquidity Fund – is a tokenized fund issued on the Ethereum blockchain, offering institutional investors access to making profits in US dollars.
Like stablecoins, BUIDL is pegged to a stable value of $1 per unit and invests in assets such as US dollars, US treasury bills and repurchase agreements. After launching in March, BUIDL experienced extraordinary growth, raising $550 million in AUM, becoming the largest tokenized fund in the market.
To facilitate the further development of BUIDL, Bloomberg states that BlackRock, in collaboration with its broker Securitize, has entered into talks with major exchanges such as Binance, OKX and Deribit to introduce the money market token as a collateral asset for derivatives trading on their respective exchanges . platforms.
BlackRock will aim to charge traders a 0.5% management fee in line with its current standard policy. However, the employ of BUIDL is constrained only to eligible institutional investors with a minimum investment amount of $5 million.
Currently, cryptocurrency brokers such as FalconX and Hidden Road have already authorized their clients to employ BUIDL as collateral for trading. However, the potential entry into the derivatives market of powerful exchanges such as Binance and OKX creates a significant opportunity to exponentially enhance the market impact of a tokenized find.
BlackRock Challenges USDT Dominance in Derivatives Trading
By introducing BUIDL to cryptocurrency trading, BlackRock will experience mighty opposition from USDT Tether, which is the most common security asset in the cryptocurrency market. USDT is the world’s largest stablecoin and third-largest cryptocurrency with a market capitalization of $120 billion.
There are currently no confirmatory comments from BlackRock or the mentioned cryptocurrency exchanges regarding the planned introduction of BUIDL to cryptocurrency derivatives trading. However, the successful implementation of this initiative would represent another unique milestone in the investment firm’s digital asset campaign.
BlackRock already unveils the largest Bitcoin and Ethereum spot ETFs with net assets of $25.79 billion and $1.26 billion, respectively, according to data from SoSoValue. By hedging assets in the cryptocurrency market, which generated nearly three-quarters of cryptocurrency trading volume in September, BlackRock could expand its reach in the digital assets industry.
Featured image from Investopedia, chart from Tradingview
