BlackRock's BUIDL, the asset manager's first tokenized money-market fund, has been embraced as collateral across major crypto trading platforms, but its wider use in traditional finance is constrained by bank capital charges, unfinished legal documentation and settlement rules tied to banking hours.

A Bloomberg report carried by Moneycontrol quotes Dan Maley, who oversees BlackRock's Asia-Pacific cash business, on extending tokenized collateral beyond digital-asset markets, and a PANews summary attributes three constraints to him. The issue is therefore not only whether a fund can be represented on a blockchain, but whether banks and counterparties can use that representation within existing collateral, custody and settlement frameworks.

BUIDL has grown to about $2.3 billion since its 2024 launch, according to PANews, but its holder base remains small. On October 6, RWA.xyz data compiled by Eco showed $2.25 billion, placing the fund third among tokenized Treasury funds behind Circle's USYC at $2.41 billion and Ondo's USDY at $2.30 billion, with 106 holders and a $5 million minimum.

Using a money fund as collateral takes four steps today

ISDA's October 6 paper, "Assessing Tokenized Money Market Funds as Eligible Collateral Under the ISDA CSA," explains that using a money-market fund as collateral today requires selling it for cash first. A tokenized fund, by contrast, could be pledged directly, provided the receiving party agrees to accept it. Returning the collateral reverses the four steps.

Crypto venues already say yes

Securitize, which tokenizes BUIDL and acts as its transfer agent, announced in June 2025 that Crypto.com and Deribit would accept BUIDL as collateral. Binance has said it accepts it as well, and OKX followed in April 2026. Securitize's July 2026 release on BUIDL discloses that its broker-dealer arm is paid by BlackRock as the fund's placement agent.

Acceptance comes with a discount. On March 25, 2026, Crypto.com cut its haircut on BUIDL from 2% to 1%, meaning a larger share of deposited BUIDL counts toward margin. The exchange notes availability, haircuts and eligibility vary by jurisdiction and can change. Even across haircut levels, the dollar differences on a $100 million BUIDL deposit are modest, and the CFTC's 0.5% rate applies to swap initial margin on a fund holding only securities under one year, so it is not like-for-like. Sources: Crypto.com; Chapman and Cutler.

One bank has done it, and another offers custody

The bank precedent dates from October 2023, when JPMorgan's Tokenized Collateral Network settled a live OTC derivatives trade in which BlackRock tokenized shares in one of its money-market funds and transferred them to Barclays as collateral. JPMorgan said the documentation was amended to support the transaction.

In an April 28 joint release, OKX, BlackRock and Standard Chartered said OKX VIP and institutional clients can post BUIDL as collateral held off-exchange in regulated custody at the bank while trading on OKX Middle East. The release describes the arrangement as the first time a globally systemically important bank has acted as custodian in such a structure and says the collateral is segregated from OKX's own assets. It gives no amounts and does not say Standard Chartered lends against BUIDL.

The bank is also central to the fund Maley's unit is bringing to Asia. BlackRock's HKD Digital Liquidity Fund, authorised in Hong Kong in September, has Standard Chartered as trustee, custodian and administrator, and investors will be able to subscribe and redeem with fiat or HKDAP, a regulated Hong Kong dollar stablecoin issued by Standard Chartered-led Anchorpoint Financial.

What regulated banks still need

On July 13 the CFTC approved a final rule, effective August 17, that removes a restriction which had disqualified most money-market fund shares as initial-margin collateral for uncleared swaps. Law firm Chapman and Cutler says the change could widen the pool of eligible funds to about 72 Treasury funds, from as few as four, and sets fixed haircuts of 0.5%, 2% and 4% by portfolio maturity. The rule applies only to swap dealers outside the prudential regulators' margin rules, and as of the firm's August 3 alert the prudential regulators had not adopted parallel changes.

Capital is the other brake. A March 5 interagency FAQ from the Fed, OCC and FDIC gives tokenized securities the same capital treatment as untokenized ones, according to a July report from ISDA and Global Digital Finance. For a bank holding a money-market fund in its banking book, that can mean a minimum 20% risk weight, which the report says may make bank treasuries and smaller banks less willing to receive them. A survey by The ValueExchange, cited in the same report, found 44% of firms expect to accept tokenized money-market funds as collateral by the end of 2027.

The documents themselves are not finished. ISDA's October paper states that it is not a final statement and asks market participants for feedback on standard amendments, their format and their timeline. It does not address commercial appetite, regulatory consistency or the enforceability of the tokenization structures on the market. Which record counts as the legal one — the token, a transfer agent's register or a custodian's books — changes how a counterparty takes control.

The July report tested collateral workflows in a sandbox with 48 firms and found existing US frameworks fit all three tokenization models on eight of ten legal and regulatory dimensions. The two exceptions were cleared variation margin, where money-market funds are excluded, and SEC initial margin, where there is no explicit guidance.

That analysis covers money-market funds registered under the Investment Company Act. BUIDL's disclosures describe a privately offered fund that is not registered under that law, so the conclusions may not carry across to it. The disclosures add that its shares are not bank deposits, carry transfer restrictions and give holders an interest in the fund rather than a claim on any particular asset in it. Moody's assigned BUIDL an Aaa-mf money market fund assessment on May 13, 2026, which Moody's says is not a credit rating.

A token moves at night, but cash follows bank hours

A tokenized transfer can settle in minutes on a Sunday, but ISDA notes that standard collateral terms define business days around banks and settlement systems. Parties would need to amend those terms and confirm that transfers can occur when commercial banks are closed.

Circle added a smart contract in April 2024 that lets BUIDL holders swap shares for USDC, providing a digital-dollar exit. Dollars in a bank account require another conversion, and Circle now runs its own tokenized fund, USYC, which the Eco data rank first. Liquidity in tokenized markets is also a concern the IMF has raised.

What to watch

For now, the evidence of BUIDL's adoption as collateral comes mostly from crypto markets, with banks at the edges. The next measurable steps are whether more banks provide regulated custody or accept tokenized funds within their own collateral frameworks, and whether the legal and margin-rule changes described above become usable for privately offered funds such as BUIDL.

This article is provided for informational purposes only and does not constitute financial, legal or investment advice.

Source: Coindoo