BlackRock eyes BUIDL token as collateral in crypto derivatives market: report

BlackRock is seeking to have its digital money-market token, BUIDL, used as collateral in cryptocurrency derivatives trades. According to sources familiar with the discussions, the company is in talks with major exchanges like Binance, OKX, and Deribit about the possibility, as reported by Bloomberg.

BUIDL is targeted at qualified institutional investors, with a minimum investment of $5 million. The token represents BlackRock’s USD Institutional Digital Liquidity Fund, which invests in secure instruments such as U.S. Treasury bills and cash. Unlike traditional stablecoins like Tether’s USDT, BUIDL also offers interest to its holders, which could make it appealing to derivatives traders.

Is BlackRock Eyeing a Stablecoin and Derivatives Market Dominance?

Crypto derivatives are financial products based on the price movements of cryptocurrencies like Bitcoin. Traders often need collateral for these contracts, with stablecoins like USDT being the most commonly used due to their $1 peg, which ensures stability during trades.

BUIDL’s potential use as collateral could challenge USDT’s dominance in this space. BlackRock aims to have BUIDL accepted by more platforms, potentially increasing its market presence. Currently, prime brokers like FalconX and Hidden Road, as well as custodian Komainu, are already allowing clients to use BUIDL as collateral. These early adopters include hedge funds and institutional investors.

Crypto derivatives trading represented over 70% of total crypto trading volume in September, with more than $3 trillion in contracts traded that month, according to CCData. Given the massive scale of this market, if BUIDL gains traction on major exchanges like Binance and Deribit, BlackRock could position itself as a significant player in both the stablecoin and derivatives markets.