The news of the Binance tie-up is significant because it will likely further increase the popularity of BUIDL, which the world’s largest asset manager launched last year. Since then, its market cap has grown to over $2.5 billion.
The token is especially attractive to big investors since, unlike stablecoins like Tether and USDC, it pays out the yield it collects from its reserves. The current yield is roughly around 4%, with BlackRock charging a management fee of 0.2% to 0.5%.
To create the token, BlackRock works with a firm called Securitize that specializes in issuing digital assets. In an interview with Fortune, Securitize CEO Carlos Domingo said BUIDL is attractive to institutional traders because of the yield it pays, but also because it is viewed by exchanges as high value collateral that can allow its holders to borrow more.
“In capital markets, every transaction involves updating a ledger. Right now, the ledgers are built on software from the 1970s, and the process is siloed,” said Domingo. In contrast, he noted, blockchains are easy to access and can settle trades almost instantly.
Binance’s decision to add BUIDL comes at a time when the exchange giant is increasing ties to the traditional financial sector. In a statement, the company’s Head of VIP & Institutional, Catherine Chen, said adding BUIDL came partly in response to customer requests.
“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,” said Chen.
Friday’s BUIDL news comes after other big crypto derivative platforms, including Coinbase-owned Deribit, did the same in recent months.
