BlackRock Aims to Disrupt USDT and USDC's Market Dominance with New Proposal

BlackRock is poised to challenge the dominance of USDT and USDC in the cryptocurrency derivatives market with its innovative proposal to have its BUIDL token accepted as collateral on major crypto exchanges. This strategic move is part of BlackRock's broader initiative to strengthen its foothold in the crypto sector, especially following its significant investments in Bitcoin through its Spot Bitcoin ETF.

Key Takeaways

• BlackRock proposes using its BUIDL token as collateral on crypto exchanges.

• The initiative targets the dominance of USDT and USDC in the derivatives market.

• BlackRock is in discussions with top exchanges like Binance, OKX, and Deribit.

• The BUIDL token is currently utilized by institutional investors as collateral.

• BlackRock's assets in Bitcoin ETFs have reached $25.79 billion, making it a leading player in the market.

BlackRock's Strategic Move

BlackRock's proposal aims to introduce the BUIDL token as a viable alternative to the widely used stablecoins, USDT and USDC, which currently dominate the crypto derivatives landscape. According to reports, BlackRock is collaborating with its brokerage partner, Securitize, to engage with leading crypto exchanges, including Binance, OKX, and Deribit, to facilitate this transition.

The introduction of the BUIDL token as collateral is expected to enhance its utility and adoption, particularly among institutional investors. Currently, crypto prime brokers like FalconX and Hidden Road accept BUIDL as collateral for their clients, which include hedge funds. By integrating BUIDL into major exchanges, BlackRock aims to significantly expand its reach and influence in the crypto market.

Financial Implications

This strategic move is not just about market competition; it also has financial implications for BlackRock. The asset manager currently charges a 0.5% management fee on the BUIDL token. By introducing it into the crypto derivatives market, BlackRock stands to boost its revenue, especially since derivatives trading accounts for a substantial portion of the overall trading volume in the crypto space.

BlackRock's Growing Presence in Crypto

BlackRock has been actively solidifying its position in the cryptocurrency market, particularly since the launch of its Spot Bitcoin ETFs. Recent data indicates that the asset manager holds net assets of $25.79 billion in its Bitcoin ETF, making it the largest among all issuers. This impressive figure places BlackRock as the third-largest holder of Bitcoin, trailing only behind Satoshi Nakamoto and Binance.

In addition to its Bitcoin investments, BlackRock has also shown interest in the Ethereum ecosystem through its Spot Ethereum ETF, ETHA, which has $1.12 billion in assets under management. This positions BlackRock as a significant player in the Ethereum market, second only to Grayscale.

Future Prospects

Looking ahead, BlackRock's aggressive strategy in the crypto space may lead it to become the largest Bitcoin holder by next year, according to Bloomberg analyst Eric Balchunas. The firm has also diversified its investments into Bitcoin mining, backing U.S. companies like Marathon Digital and Riot Blockchain.

As BlackRock continues to expand its influence in the cryptocurrency market, the introduction of the BUIDL token as collateral could reshape the dynamics of crypto derivatives trading, challenging the established dominance of USDT and USDC. This move not only highlights BlackRock's commitment to the crypto sector but also signals a potential shift in how institutional investors engage with digital assets.

Sources

• BlackRock To Challenge USDT And USDC's Dominance With New Proposal, CoinGape.