BlackRock Eyes Tokenized Fund Shares for Wall Street Collateral

BlackRock sees tokenized fund shares as potential collateral in traditional financial markets, extending an established crypto trading use into a wider institutional setting where documentation and operational questions remain.

“The larger unlock becomes then when you can utilise that for the traditional financial ecosystem,” said Dan Maley, BlackRock’s head of cash management for Asia Pacific. BlackRock announced no new traditional-market collateral counterparty, program or timetable for the broader use he described.

Shares of BlackRock USD Institutional Digital Liquidity Fund (BUIDL), a private fund, are accepted as off-exchange trading collateral on Binance under an arrangement announced in November 2025. The arrangement covers institutional and advanced traders in the crypto market. It does not establish broad acceptance of the shares by traditional financial institutions.

A traditional-market precedent dates to 2023. JPMorgan Chase facilitated a transaction in which tokenized shares of a BlackRock money-market fund were pledged to Barclays for an over-the-counter derivatives contract. That was a specific derivatives deal, rather than a marketwide collateral program.

BlackRock expanded a different product line on Aug. 4, launching tokenized share classes for selected Institutional Cash Series money-market funds in Europe. The shares use Kinexys by J.P. Morgan on Ethereum. Eligible investors can transfer holdings between approved investor wallets around the clock, while the transfer agent maintains the official shareholder record.

Those European share classes represent interests in money-market funds. BUIDL is a separate private fund with a specific Binance collateral arrangement. The distinction matters when assessing how much of BlackRock’s tokenized fund business is already being used as collateral in traditional markets.

The appeal of transferring tokenized fund shares as collateral without redemption is that holders need not wait for cash proceeds before moving collateral. BlackRock identified digital collateral management as a possible use for the European share classes, but its Aug. 4 announcement identified no new traditional-market collateral arrangement.

The International Swaps and Derivatives Association (ISDA) examined documentation and operational questions for tokenized money-market fund collateral in a paper published Oct. 6. Those questions would need to be addressed for the shares to become routinely usable in traditional-market collateral agreements.