Circle’s USDC and BlackRock’s BUIDL spearhead collateral innovation in derivatives markets

Crypto trading platforms increasingly adopt blockchain-native assets like the USDC stablecoin and tokenized treasuries such as BlackRock’s BUIDL to enhance collateral efficiency in derivatives markets.

These instruments offer a blend of stability, yield, and compliance, making them attractive to institutional players seeking capital optimization.

USDC and BUIDL gain momentum in crypto derivatives

On June 18, Coinbase Derivatives revealed that USDC will be accepted as collateral for margined futures, subject to regulatory approval from the Commodity Futures Trading Commission (CFTC).

Coinbase CEO Brian Armstrong said:

“This is the first time we’ll see USDC used as collateral in US futures markets – and we will work closely with the CFTC to make this happen.”

The stablecoin’s integration will rely on Coinbase Custody Trust, a Qualified Custodian regulated by the New York Department of Financial Services.

In a separate development, tokenized treasuries are also gaining traction in the derivatives market.

On the same day, Securitize, a digital asset firm, announced that BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) can now be used as collateral on Crypto.com and Deribit.

The token represents a short-term yield-bearing fund backed by cash and US Treasuries and currently manages $2.9 billion in assets.

By accepting BUIDL as margin, these platforms allow institutional traders to earn yield on their capital while deploying it for leveraged positions.

Why are these assets being embraced?

These recent developments underline this trend and mark a significant shift toward more capital-efficient and transparent market structures.

Coinbase pointed out that assets like USDC offer near-instant settlement and enjoy broad acceptance across centralized and decentralized platforms.

Carlos Domingo, Co-Founder and CEO of Securitize, also echoed this view by saying:

“Tokenized Treasuries are being actively used to improve capital efficiency and risk management across some of the industry’s most sophisticated trading venues, while still offering yield.”

Meanwhile, these moves follow the November 2024 recommendation from CFTC Acting Chairman Caroline D. Pham, urging firms to explore the use of distributed ledger technology for non-cash collateral.

According to her, embracing these new technologies would not compromise market integrity considering there have been “successful and proven commercial use cases for tokenization of assets, such as digital government bond issuances in Europe and Asia, over $1.5 trillion notional volume in institutional repo and payments transactions on enterprise blockchain platforms, and more efficient collateral and treasury management.”