BlackRock Discusses Using BUIDL as Collateral For Derivatives Trading

Multinational investment company BlackRock is discussing with various crypto exchanges to use BUIDL as collateral for derivatives trading.

BlackRock, a multinational investment company, is reportedly discussing with various crypto exchanges to use BUIDL, a token launched by the company, as collateral for derivatives trading.

This move by BlackRock is aimed at positioning itself strongly in the highly lucrative crypto derivatives market.

Also, its BUIDL token will compete with Tether in the crypto market by offering interest to holders. Currently, Tether is dominating the crypto derivatives market.

According to the report, BlackRock has held talks with Binance, OKX, and Deribit regarding the use of BUIDL. This move by BlackRock will enable it to gain a foothold in the lucrative crypto derivatives market.

Deribit’s CEO has confirmed the details of this deal. In addition, the exchange is considering BUIDL as a collateral option for large-scale derivatives trade.

BlackRock has vast experience in traditional finance, and we can expect the investment company to dominate the crypto derivatives segment using its years of expertise.

However, this will only become a reality if leading crypto exchanges accept the BUIDL token as collateral.

Recently, BlackRock has shown great interest in the crypto market, and this move to tap into the derivatives market is another step in that direction.

Earlier this year, the investment company purchased over $680 million in Bitcoin following the success of its IBIT ETF.

If BUIDL is used as collateral in crypto derivatives trading, it would benefit BlackRock by providing billions in revenue.

BUIDL is designed to maintain a stable value as a tokenized money-market fund. It can attract more traders looking for reliable collateral options.

The high trading volumes and fees associated with derivatives trading could significantly boost BlackRock’s earnings.

Also, BUIDL may challenge the dominance of existing stablecoins like Tether (USDT) and USD Coin (USDC) in the derivatives market. Traders might prefer BUIDL for its stability and the backing of a major financial institution.

BlackRock is keeping its plans close to the chest as it evaluates the token’s viability in the highly competitive derivatives market. But success with BUIDL could pave the way for other traditional financial institutions to explore similar ventures.

About BlackRock’s BUIDL

BUIDL is a tokenized money-market fund that was launched on the Ethereum blockchain. It maintains a stable value of $1 per token.

This stability is achieved by investing 100% of its assets in cash, U.S. Treasury bills, and repurchase agreements.

Investors get BUIDL tokens as they represent shares in the fund. The fund generates yield from its investments, and these earnings are distributed to investors as new tokens each month.

Soon after its launch, BUIDL has achieved significant success. In May 2024, this token gained a market cap of $375 Million.

BUIDL has surpassed the market cap of a year-old Franklin OnChain U.S. Government Money Fund (BENJI). The Franklin product’s market cap was pegged at $368 Million at the time.

Also, FalconX and Hidden Road are the two leading crypto prime brokers that have authorized the use of BUIDL as collateral.

Recently, BUIDL received $50 Million from Ondo Finance and OUSG. Then, this tokenized offering has institutional funds from FOBXX, OUSG, USDY, and USTB.

This article is for informational purposes only. Crypto investment involves inherent risks due to the volatility in price. Readers should conduct their own research before making any investment decision.

Also, you can consult a crypto expert before investing in cryptocurrencies.