BlackRock is actively seeking to establish its digital money-market token, BUIDL, as a viable collateral option in cryptocurrency derivatives trading.
Insiders indicate that the company is currently in discussions with prominent cryptocurrency exchanges regarding this potential collaboration.
BUIDL is designed specifically for qualified institutional investors, requiring a minimum investment of $5 million. This token serves as a digital representation of BlackRock’s USD Institutional Digital Liquidity Fund, a money-market fund focused on U.S. Treasury bills, cash, and other low-risk instruments.
Unlike traditional stablecoins such as Tether’s USDT, BUIDL offers interest payments to its holders, enhancing its appeal for derivatives traders.
BlackRock’s Strategic Play in the Stablecoin and Derivatives Markets
Crypto derivatives are contracts that derive their value from fluctuations in cryptocurrency prices. Traders utilize these instruments to speculate on asset values like Bitcoin (BTC) without direct ownership. Participation typically requires collateral, often in the form of stablecoins. USDT is widely used due to its stable value, crucial for securing trades.
The introduction of BUIDL could present significant competition to USDT’s established market position. BlackRock aims to increase the number of platforms accepting BUIDL as collateral, which could greatly enhance its market presence.
Notably, prime brokers are already enabling clients to use BUIDL as collateral, with additional custodians recently adopting the token. Early users include hedge funds and institutional investors.
In September alone, crypto derivatives trading constituted over 70% of all crypto trading volume, amounting to $3 trillion in contracts, highlighting the sector’s critical role within the crypto landscape. Gaining acceptance of BUIDL on major exchanges could solidify BlackRock’s status as a formidable player in this dynamic market.
