As a seasoned crypto investor with over a decade of experience navigating the volatile digital asset landscape, I must admit that BlackRock’s latest move to make its digital money-market token, BUIDL, an option for collateral in cryptocurrency derivatives trades, has piqued my interest.
BlackRock aims to incorporate its digital money-market token, BUIDL, as security for cryptocurrency derivative transactions.
According to reports from Bloomberg, it’s being discussed that the company could be in negotiations with significant cryptocurrency trading platforms such as Binance, OKX, and Deribit regarding a potential partnership.
This BUIDL token caters exclusively to institutional investors who are willing to invest a minimum of $5 million. It serves as the digital counterpart of BlackRock’s USD Institutional Digital Liquidity Fund, an investment vehicle that primarily holds U.S. Treasury bills, cash, and other safe assets.
BUIDL sets itself apart from conventional stablecoins such as Tether’s USDT (USDT), by offering interest to its holders. This feature might appeal particularly to derivative traders.
Is BlackRock trying to dominate stablecoins and derivatives markets?
Crypto-based derivatives are agreements whose worth depends on the fluctuations of cryptocurrency prices. These instruments enable traders to gamble on the cost of assets such as Bitcoin (BTC) without physically owning them. Typically, traders need to provide collateral, which can be in the form of stable digital currencies like Tether’s USDT, due to its consistent value of $1, making it dependable for securing trades.
Meanwhile, the arrival of BUIDL in this market may pose a threat to USDT’s current supremacy. BlackRock anticipates that more financial institutions will start accepting BUIDL as security, potentially broadening its influence, according to Bloomberg.
Previously limited to traditional collateral types, prime brokers such as FalconX and Hidden Road now accept BUIDL as a form of collateral for their clients. More recently, custodian Komainu has also joined this group of early adopters, which includes hedge funds and other institutional investors using innovative assets like BUIDL.
In September, more than three-quarters of all cryptocurrency trading activity was derived from derivative contracts, as reported by the research firm CCData, totaling an impressive $3 trillion in trades for the month.
By significantly contributing to the crypto ecosystem through derivatives, accepting BUIDL on prominent platforms such as Binance and Deribit could establish BlackRock as a dominant force within this particular market.
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2024-10-18 21:04