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Highlights
- BlackRock is pushing to have its BUIDL token being used a collateral on the crypto derivatives market.
- This poses a challenge to USDT and USDC since they are what is largely used for derivative trades.
- BlackRock already has a huge stake in the crypto space through its Bitcoin ETF, which makes it the third largest BTC holder.
BlackRock is set to challenge USDT and USDC’s dominance with its new proposal for crypto exchanges to adopt its BUIDL token as collateral on the derivatives market. This forms part of the world’s asset manager’s move to gain a greater hold of the crypto market, seeing as it already holds a significant amount of bitcoins through its Spot Bitcoin ETF.
BlackRock To Challenge USDT And USDC’s Dominance
BlackRock’s new proposal seeks to challenge USDT and USDC’s dominance in crypto derivatives. According to a Bloomberg report, the world’s largest asset manager and its brokerage partner, Securitize, are in talks with some of the top crypto exchanges, including Binance, OKX, and Deribit, about using the BUIDL token as collateral on the derivatives market.
This move challenges Tether’s USDT and Circle’s USDC since both stablecoins are the most commonly used in the crypto derivatives market. Meanwhile, it will also provide additional utility for BlackRock’s BUIDL token.
Institutional investors are currently the primary users of the token as crypto prime brokers like FalconX and Hidden Road accept it as collateral among their clients, including hedge funds. Therefore, having BUIDL on platforms like the world’s largest crypto exchange, Binance, will undoubtedly expand the token’s adoption.
It will also help boost the company’s revenue, considering that the asset manager currently charges a 0.5% management fee on the BUIDL token. Introducing the token into the crypto derivatives market is also strategic, considering that it accounts for most of the trading volume in the crypto space.
The Asset Manager’s Hold In The Crypto Space
BlackRock continues to solidify its position in the crypto space since the launch of its Spot Bitcoin ETFs. SoSoValue data shows that the asset manager currently has net assets of $25.79 billion for its Bitcoin ETF, the most among all issuers. Thanks to this, the asset manager is third among top Bitcoin holders, behind BTC creator Satoshi Nakamoto and Binance.
The asset management firm has also intensified its buying spree in recent times. CoinGape reported that the firm’s IBIT Bitcoin ETF scooped 5,805 BTC in just 24 hours. Interestingly, Bloomberg analyst Eric Balchunas predicts that BlackRock will become the largest Bitcoin holder by next year.
The asset manager also has a stake in the Ethereum ecosystem through its Spot Ethereum ETF, ETHA. BlackRock holds $1.12 billion in assets under management (AuM) for the ETF. This puts it only behind Grayscale among the Ethereum ETF issuers.
It is worth mentioning that the firm’s interest in the crypto space also extends to Bitcoin mining. BlackRock has invested in the US Bitcoin mining companies, including Marathon Digital and Riot Blockchain.
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