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BlackRock explores using BUIDL as collateral for derivatives

BlackRock explores using BUIDL as collateral for derivatives

GrafaGrafa2024/10/20 10:25
By:Liezl Gambe

BlackRock is in discussions with cryptocurrency exchanges to use its BUIDL (CRYPTO:BUIDL) tokenised fund as collateral for derivatives trading, according to a Bloomberg report.

The BUIDL fund, officially known as the BlackRock USD Institutional Digital Liquidity fund, is tied to the US dollar and offers interest to holders, setting it apart from stablecoins like Tether (CRYPTO:USDT).

Talks are reportedly ongoing with exchanges including Binance, OKX, and Deribit.

While the details of these discussions remain largely private, Deribit’s CEO, Luuk Strijers, confirmed that the exchange is “reviewing” several tokens, including BUIDL.

Securitize, BlackRock’s brokerage partner, commented, “The BUIDL ecosystem keeps growing, and we see significant potential in traders using the fund as collateral.”

BlackRock’s goal is to introduce BUIDL as a viable alternative to stablecoins for collateral in derivatives trading.

Though not strictly a stablecoin, BUIDL shares similarities in that it is tied to one dollar and invests in Treasury bonds, while also paying interest to holders.

The use of BUIDL as collateral could unlock new revenue streams, as derivatives trading constitutes a significant portion of the trading volume on centralised exchanges.

BlackRock, with its established presence in finance, is positioning itself to expand its reach into the crypto sector through this initiative.

However, Bloomberg noted the challenges involved in entering the stablecoin market, pointing to the recent decline in the value of PayPal’s PYUSD (CRYPTO:PYUSD) stablecoin.

For now, BlackRock is taking a cautious approach, evaluating the viability of BUIDL in the market before making any major announcements.

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