Recent developments indicate that BlackRock is exploring partnerships with various centralized exchanges to enable the use of its BUIDL fund as collateral for derivatives trading.
According to a report by Bloomberg published on October 18, negotiations involve prominent exchanges like Binance, OKX, and Deribit. This initiative aligns with a broader strategy by Wall Street institutions to enhance their presence in the digital asset sector. Notably, the BUIDL token calls for a minimum investment of $5 million, catering specifically to qualified institutional investors.
Additionally, two major crypto prime brokers, FalconX and Hidden Road, already allow their hedge fund clients to utilize BUIDL as collateral. Recent announcements from custodian Komainu indicate that its clients can also trade through Hidden Road leveraging this token.
Expanding Market Reach
The potential acceptance of BUIDL on platforms like Binance and Deribit would greatly expand its market presence.
Recent data suggests that the crypto derivatives market generated nearly $3.5 trillion in trading volume in September, nearly four times the size of the spot market, according to sources such as Coinglass and The Block.
Though BlackRock has not publicly commented on this initiative, Deribit’s CEO, Luuk Strijers, highlighted that the exchange is contemplating various tokens, BUIDL included. However, Strijers emphasized the importance of securing regulatory approvals and gaining a comprehensive understanding of the token’s technical attributes prior to any implementation.
The Convergence of DeFi and Traditional Finance
The movement of the world’s largest asset manager into the cryptocurrency space coincides with reports of a crypto-oriented entity venturing into traditional finance.
Tether Limited, the organization behind the Tether USD (USDT) stablecoin, is reportedly eyeing the possibility of providing lending services to commodities trading firms. This strategy may serve as a way to utilize its reported $5.2 billion profit amassed in the year’s first half.
Moreover, decentralized finance (DeFi) platforms are considering the integration of BUIDL as tokenized shares within their financial products.
Back on August 26, leading money market platform Aave proposed a novel GHO Stability Module (GSM), tied to BlackRock’s tokenized fund. This module aims to uphold the pegging of GHO, Aave’s stablecoin, by facilitating the exchange of USD Coin (USDC) for BUIDL.
Additionally, on September 26, stablecoin issuer Ethena Labs introduced a new stablecoin fully backed by BUIDL, the UStb, presenting an alternative for users preferring a more conservative investment approach compared to Ethena’s USDe.
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