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Cryptocurrency News Articles
BlackRock Said to Be in Talks to List Tokenized Money Market Fund BUIDL as Collateral on Binance, Deribit and OKX
Oct 19, 2024 at 05:05 am
Real-world asset tokenization platform Ondo Finance's governance token (ONDO) spiked 8% on Friday following a report about asset manager BlackRock's push
Asset manager BlackRock Inc's early talks to list its tokenized money market fund as collateral for derivatives trading on major exchanges have sent governance tokens of real-world asset tokenization platform Ondo Finance Ond to new highs.
On Friday, Ondo's token surged 8% to 79 cents after Bloomberg reported that BlackRock and issuance partner Securitize are in early talks with crypto exchange giants Binance, Deribit and OKX to accept BUIDL as margin for trading derivatives.
The report sent OND spiking to 79 cents within the hour, and while it pared some of those gains, it's still up nearly 9% over the past 24 hours. CoinDesk's 20 leading digital assets index rose 2.2% during the same time frame.
It's unclear how the development would impact the Ondo platform, but its governance token has been a favored proxy play among crypto traders for BlackRock's tokenization push, moving abruptly on news related to the asset management giant.
Notably, the token jumped as much as 20% when CoinDesk reported that BlackRock filed paperwork with Securitize to create the BUIDL offering. The token also moved when Ondo started to use BUIDL as the backing asset of its own retail-focused money market fund token (OUSG) to offer instant redemptions and conversions for Circle's USDC stablecoin.
BUIDL is the largest tokenized offering on the market with over $550 million in assets. Its price is fixed at $1 and offers money market yield to investors without leaving blockchain rails. It's offered to institutional investors and other protocols to invest or use it as a reserve asset, with a minimum investment limit of $5 million.
While BUIDL is the largest in the nascent asset class, other projects have also created tokens that are backed one-to-one by U.S. Treasuries or commercial paper. These tokenized U.S. Treasuries have grown to a $2.3 billion asset class within crypto assets, tripling in size over the past year.
Funds, businesses and protocols using them as a vehicle to park their on-chain cash and earn yield have fueled the growth. The next frontier for these tokens might be getting accepted as an on-chain collateral asset.
The allure of using these tokens as collateral is that it allows traders to keep earning a yield while using them for margin for a trade, as opposed to posting stablecoins for collateral. Hashnote's $320 million USYC money market fund token got listed on Deribit as a cross-margin collateral option earlier this month.
Meanwhile, institutional trading services FalconX and Hidden Road already accept BUIDL as a collateral asset. State Street sees the potential in tokenized collateral assets in traditional finance, as well.
In an interview with CoinDesk earlier this month, Donna Milrod, State Street's chief product officer, said that collateral tokens could help mitigate liquidity stress during financial crises, for example allowing pension funds to post money market tokens for margin calls without selling underlying assets to raise cash.
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