BlackRock Explores Using BUIDL as Collateral in Crypto Derivatives Trading

BlackRock is reportedly negotiating with centralized exchanges, including Binance, OKX, and Deribit, to enable the use of its BUIDL fund as collateral for derivatives trading, according to an October 18 report from Bloomberg.

This initiative is part of a broader push by Wall Street firms to strengthen their participation in the digital asset space. The BUIDL token, aimed at institutional investors, requires a minimum investment of $5 million.

Currently, some brokers, such as FalconX and Hidden Road, already allow hedge funds to use BUIDL as collateral, and custodian Komainu recently joined them by facilitating transactions through Hidden Road using the token. If exchanges like Binance and Deribit start accepting BUIDL directly, the token’s market exposure could expand significantly, especially given the crypto derivatives market’s volume, which reached nearly $3.5 trillion in September.

Deribit’s CEO, Luke Striers, confirmed that the exchange is considering BUIDL, although regulatory clearance and a deeper technical assessment are necessary before moving forward.

At the same time, decentralized finance (DeFi) platforms are also exploring BUIDL’s integration into their products. Aave has proposed incorporating BUIDL into its GHO Stability Module to support the stability of its GHO stablecoin. Additionally, Ethena Labs launched a new stablecoin, UStb, fully backed by BUIDL, providing an alternative to USDe for those seeking lower-risk options.

This development underscores the increasing convergence between traditional finance and the crypto sector, as asset managers like BlackRock delve deeper into digital assets while crypto firms explore opportunities within traditional financial markets.