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BlackRock wants to push its tokenized money-market fund into traditional finance. The firm is exploring whether shares in its $2.3 billion BUIDL fund can serve as collateral in conventional Wall Street financing and margin systems — a use case that’s already up and running in digital-asset markets, but hasn’t crossed over yet.
Why It Matters
This matters because it points to a potential bridge between tokenized assets and mainstream market plumbing, where collateral eligibility is often what determines whether a financial instrument can scale beyond niche use. If traditional financing and margin systems begin accepting tokenized fund shares, it could make on-chain products more usable for institutional cash management and deepen their role inside established Wall Street workflows.
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 being used as collateral on the digital-asset side. The push into traditional finance would be a new frontier, not a change to what the fund actually holds. BlackRock hasn’t named any bank or traditional-finance counterparty that’s accepted BUIDL shares this way. That part is still exploratory.
It’s a meaningful distinction.
How Tokenized Collateral Actually Works
Tokenization doesn’t change what a money-market fund holds. It changes how ownership moves. Shares represented as tokens can be transferred between approved investors without being redeemed for cash first — or they can be pledged as a position. The underlying portfolio stays the same.
Conventional money-market funds already do this kind of work in traditional finance. They support trading positions, including initial and variation margin. If banks and other institutions start accepting tokenized shares within those same arrangements, fund interests could potentially be transferred or posted without first converting to cash. That’s the pitch, basically.
And the appeal is real. Institutions could keep money invested while shifting collateral around, rather than selling out of a position to free up cash. But it only works if the counterparties on the other side accept these instruments — and if the market infrastructure can actually process them.
One thing worth being clear about: round-the-clock token transfers aren’t the same as round-the-clock redemptions. Ownership can move on-chain while redemption stays subject to the fund’s own terms and operating arrangements. Transferability on a blockchain doesn’t settle when investors get their cash back.
Legal and Operational Hurdles Pile Up
The International Monetary Fund has pointed to fragmented platforms, legal uncertainty, and the difficulty of connecting tokenized finance with existing infrastructure as core problems for the sector. A token moving cleanly on one blockchain doesn’t automatically resolve how it gets recognized across other platforms and counterparties. Those are different problems.
The International Swaps and Derivatives Association has gone further in spelling out what needs to happen. It has identified custody and asset segregation frameworks, capital and margin treatment, cross-border recognition, and legal certainty as areas that need standards and regulatory clarity before tokenized assets can really function in traditional finance. Scott O’Malia, the ISDA’s chief executive, described those areas as necessary to address for tokenized assets to move into conventional markets.
Not yet resolved.
For collateral use to actually work, parties need clear legal treatment as a tokenized share moves between counterparties, across jurisdictions, and through existing systems. Institutions need defined rights and procedures for posting, valuing, and returning collateral. A successful on-chain transfer handles one piece of that. The rest — the legal recognition, the custody rules, the margin frameworks — still needs to be built out or clarified.
The source article doesn’t describe a completed integration with traditional-finance margin systems. It’s an area under exploration. Institutional acceptance is the next step, and it’s a big one.
BUIDL’s Existing Base and What Comes Next
Nikhil Sharma, a director on BlackRock’s digital-assets team, said early BUIDL users came largely from crypto markets — stablecoin holders, mostly, looking for yield. That’s a pretty specific customer base. Expansion into traditional finance means reaching a different set of counterparties with different requirements and different operating arrangements.
The $2.3 billion fund gives BlackRock something real to work with. It’s an established product with an existing collateral use case in digital-asset markets, and the firm is trying to extend that into conventional financing. But the gap between those two worlds is still wide — legally, operationally, and in terms of infrastructure.
The ISDA’s issues span custody, segregation, capital treatment, margin rules, and cross-border recognition. The IMF has separately flagged fragmented platforms and the difficulty of linking tokenized finance to existing systems. Neither body has said those problems are solved. And BlackRock hasn’t named a single traditional-finance institution that’s agreed to take BUIDL shares as collateral.
The fund is $2.3 billion and growing.
Frequently Asked Questions
How large is BlackRock’s BUIDL tokenized money-market fund?
The BUIDL fund has reached approximately $2.3 billion since its 2024 launch.
Where are BUIDL shares currently used as collateral?
Dan Maley said BlackRock’s tokenized funds are already used as collateral in digital-asset markets. Use in traditional finance remains under exploration, with no named counterparty yet.
What obstacles stand between BUIDL and traditional-finance collateral use?
The ISDA has identified custody frameworks, capital and margin treatment, cross-border recognition, and legal certainty as unresolved issues. The IMF has separately flagged fragmented platforms and infrastructure compatibility as challenges.
