- Institutional crypto traders can now use BlackRock’s BUIDL tokens as off-exchange collateral when trading on Binance.
- The new feature boosts their capital efficiency and risk management as they participate in onchain finance.
Binance recently announced a new feature that would offer more flexibility to its users. On Friday, the world’s largest crypto exchange by trading volume revealed that it has integrated the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), a tokenized fund issued by Securitize.
BlackRock’s BUIDL Tokens as Collateral on Binance
BUIDL is a yield-earning tokenized money market fund exclusive for qualified institutional users. It is a stable asset valued at $1 per token and 100% backed by US dollar-denominated assets, such as fiat currency and Treasury bills.
The new feature allows institutional clients to utilize their BUIDL tokens as off-exchange collateral for trading on the platform. Catherine Chen, head of VIP & Institutional at Binance, highlighted that the company’s move was due to rising institutional demand.
“Our institutional clients have asked for more interest-bearing stable assets they can hold as collateral while actively trading on our exchange,” said Chen. “Integrating BUIDL with our banking triparty partners and our crypto-native custody partner, Ceffu, meets their needs and enables our clients to confidently scale allocation while meeting compliance requirements.”
Meanwhile, Robbie Mitchnick, Head of Digital Assets at BlackRock, emphasized that the measure significantly advances the fusion of traditional finance (TradFi) with Web3.
“By enabling BUIDL to operate as collateral across leading digital market infrastructure, we’re helping bring foundational elements of traditional finance into the onchain finance arena,” stated Mitchnick.
Advantages Unlocked from the Integration
Qualified institutional clients can greatly benefit from the new feature. It fundamentally boosts their capital efficiency and risk management while trading on the world’s largest crypto exchange. Additionally, it’s a major departure from a purely crypto-native collateral model toward regulated, yield-bearing tokenized real-world assets (RWAs).
The key advantage of the system is that institutional users can deposit their BUIDL tokens in exchange for credits that they can use to trade actively on Binance. At the same time, their BUIDL shares continue to earn from their underlying US dollar yield (at ~4% annual percentage yield). The process effectively eliminates the opportunity cost of holding idle capital.
Moreover, the triparty model mitigates counterparty risk. Ceffu, a regulated banking partner, serves as the off-exchange custodian of the BUIDL tokens, ensuring that the assets are separate from Binance’s trading accounts and operational funds.
For BlackRock, the Binance integration extends the BUIDL fund’s coverage beyond its initial platform on Ethereum (ETH). Its entry into the world’s largest crypto exchange ecosystem enhances its accessibility and interoperability.
Meanwhile, Binance, despite its regulatory tussles over the years, gains a reputation boost with its new linkage with the world’s largest asset manager. The development represents a massive stamp of approval that could further pave the way for the mainstream institutional adoption of blockchain-based finance.
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