BlackRock Seeks Broader Use of Tokenized Assets as Collateral, Payment Tool in Traditional Finance
Summary
- BlackRock said it is seeking to use tokenized assets as collateral and a means of payment in traditional financial markets.
- BlackRock said assets under management for its tokenized MMF BUIDL have grown to about $2.3 billion, while it is expanding the reach of tokenized products across the US, Europe and Hong Kong.
- With the IMF and ISDA pointing to legal uncertainty and collateral rules as key obstacles, BlackRock said it plans to expand links that allow traditional financial institutions to use tokenized products without building separate systems.
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BlackRock, the world’s largest asset manager, is exploring ways to use tokenized assets not only in crypto markets but also as collateral and a means of payment in traditional finance.
Bloomberg reported on October 18 that BlackRock is looking beyond issuing stocks, bonds and money market funds on blockchain networks and is focusing on improving how those assets are transferred and used as collateral. Tokenization would allow investors to transfer holdings to other investors or post them as trading collateral without first redeeming them for cash.
Dan Malee, BlackRock’s head of cash management for Asia-Pacific, said the firm’s tokenized funds are already being used as collateral in digital-asset markets. The benefits could be greater if that use expands into traditional financial markets. Key hurdles include having banks and financial institutions recognize the assets as eligible collateral, linking them to existing settlement infrastructure and securing regulatory clarity.
BlackRock is also broadening the scope of its tokenized products. Assets under management for BUIDL, the tokenized money market fund it launched in 2024, have grown to about $2.3 billion. The firm has since introduced related products in the US and Europe, and in September received approval for a Hong Kong dollar-based digital liquidity fund.
Still, the fact that tokenized assets can be transferred around the clock on blockchain networks does not mean they can be redeemed for cash at any time. The International Monetary Fund has cited fragmentation across platforms and legal uncertainty as major obstacles. The International Swaps and Derivatives Association has also said issues including custody, collateral rules and cross-border legal recognition still need to be resolved.
Nikhil Sharma, a director on BlackRock’s digital assets team, said early investors in tokenized funds were mainly crypto-market participants seeking yield while holding stablecoins. He added that it is important to build links that let traditional financial institutions use tokenized products without setting up separate systems, and that adoption is set to widen over time.
Suehyeon Lee
shlee@bloomingbit.ioI'm reporter Suehyeon Lee, your Web3 Moderator.