Key Takeaways
- • BlackRock is exploring whether shares in its $2.3 billion BUIDL tokenized money-market fund, launched in 2024, can serve as collateral in traditional Wall Street financing and margin systems, according to the primary source.
- • Tokenized BUIDL shares are already used as collateral in digital-asset markets, but no bank or traditional-finance counterparty has been named as having accepted them, so the traditional-finance use case remains exploratory.
- • Dan Maley, who runs BlackRock's cash business in Asia Pacific, said the push would be a new frontier rather than a change to the fund's underlying holdings.
- • The ISDA, through CEO Scott O'Malia, has identified custody and asset segregation, capital and margin treatment, cross-border recognition, and legal certainty as areas needing standards before tokenized assets can function in traditional markets.
- • The IMF has flagged fragmented platforms, legal uncertainty, and difficulty linking tokenized finance with existing infrastructure as core sector problems.
Summary
BlackRock is exploring whether shares in its $2.3 billion BUIDL fund can be used as collateral in conventional Wall Street financing and margin arrangements, according to the primary source. The use case already operates in digital-asset markets but has not yet crossed into traditional finance. The fund launched in 2024 and has grown to roughly $2.3 billion. Dan Maley, who runs BlackRock's cash business in Asia Pacific, said tokenized fund shares are already used as collateral on the digital-asset side, and that extending this to traditional finance would be a new frontier rather than a change to what the fund holds.
The appeal for institutions is that they could keep money invested while moving collateral, rather than selling positions to raise cash. However, the arrangement depends on counterparties accepting the instruments and on market infrastructure being able to process them. The source also stresses that round-the-clock token transfers do not equal round-the-clock redemptions, since redemption remains subject to the fund's own terms and operating arrangements.
Significant legal and operational obstacles remain. The International Monetary Fund has pointed to fragmented platforms, legal uncertainty, and the difficulty of connecting tokenized finance with existing infrastructure. The International Swaps and Derivatives Association has identified custody and asset segregation frameworks, capital and margin treatment, cross-border recognition, and legal certainty as areas requiring standards and regulatory clarity. Scott O'Malia, the ISDA's chief executive, described these as necessary to address before tokenized assets can move into conventional markets.
Nikhil Sharma, a director on BlackRock's digital-assets team, said early BUIDL users came largely from crypto markets, primarily stablecoin holders seeking yield. Reaching traditional-finance counterparties would require meeting different requirements and operating arrangements. BlackRock has not named any traditional-finance institution that has agreed to accept BUIDL shares as collateral, and neither the IMF nor the ISDA has indicated these problems are solved.
The appeal for institutions is that they could keep money invested while moving collateral, rather than selling positions to raise cash. However, the arrangement depends on counterparties accepting the instruments and on market infrastructure being able to process them. The source also stresses that round-the-clock token transfers do not equal round-the-clock redemptions, since redemption remains subject to the fund's own terms and operating arrangements.
Significant legal and operational obstacles remain. The International Monetary Fund has pointed to fragmented platforms, legal uncertainty, and the difficulty of connecting tokenized finance with existing infrastructure. The International Swaps and Derivatives Association has identified custody and asset segregation frameworks, capital and margin treatment, cross-border recognition, and legal certainty as areas requiring standards and regulatory clarity. Scott O'Malia, the ISDA's chief executive, described these as necessary to address before tokenized assets can move into conventional markets.
Nikhil Sharma, a director on BlackRock's digital-assets team, said early BUIDL users came largely from crypto markets, primarily stablecoin holders seeking yield. Reaching traditional-finance counterparties would require meeting different requirements and operating arrangements. BlackRock has not named any traditional-finance institution that has agreed to accept BUIDL shares as collateral, and neither the IMF nor the ISDA has indicated these problems are solved.
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