BlackRock is attempting to get BUIDL, its digital money market token, utilized as collateral in Bitcoin derivatives transactions.
According to people with knowledge of the conversations, the business is “in talks” about the prospect with significant cryptocurrency exchanges like OKX, Deribit, and Binance, Bloomberg reports.
BUIDL is a token with a minimum commitment of $5 million intended for institutional investors meeting certain requirements.
It is an electronic version of BlackRock’s USD Institutional Digital Liquidity Fund, a money market fund that invests in cash, safe assets, and U.S. Treasury notes.
In contrast to conventional stablecoins such as Tether’s USDT, BUIDL offers interest to its holders, a feature that may draw in derivatives traders.
Is BlackRock attempting to control derivatives markets?
Financial contracts known as cryptocurrency derivatives get their value from changes in cryptocurrency prices.
These contracts let traders make educated guesses about the value of assets, such as Bitcoin, without actually purchasing them.
In order to take part, traders frequently have to deposit collateral, which they may do with stablecoins. For instance, Tether’s USDT is commonly utilized in this capacity since it consistently retains a $1 value, which makes it dependable for safeguarding deals.
However, BUIDL’s introduction into this market might jeopardize USDT’s hegemony. According to Bloomberg, BlackRock is hopeful that more platforms will accept BUIDL as collateral because doing so might greatly increase its market reach.
Custodian Komainu has joined the prime brokers that have already permitted their clients to use BUIDL as collateral, including FalconX and Hidden Road. Hedge funds and other institutional investors are among these early adopters.
According to research firm CCData, $3 trillion worth of contracts were traded in September alone, making up over 70% of all cryptocurrency trading volume.
Because of this, derivatives play a significant role in the cryptocurrency ecosystem. If BUIDL gets approved on well-known exchanges like Deribit and Binance, BlackRock may be positioned to dominate this sector.
