BlackRock has identified the use of tokenized investment funds as trading collateral in traditional financial markets as a potential next application for blockchain technology, building on existing arrangements that already allow institutional crypto traders to pledge tokenized fund holdings.
Summary
- BlackRock sees tokenized money market funds serving as collateral for trades across traditional financial markets.
- Its BUIDL fund already supports institutional collateral arrangements through Binance, providing an existing operational example.
- BlackRock’s European tokenization rollout covers fund ranges managing USD 311 billion, not fully tokenized assets.
- Ondo introduced three portfolios using BlackRock investment strategies, making diversified exposure available through digital tokens.
- Traditional market adoption still depends on custody, clearing and collateral rules that participating institutions must satisfy.
According to an October 19 Bloomberg report, Dan Maley, BlackRock’s head of cash management for Asia Pacific, said the firm’s tokenized funds are already being used as collateral in digital-asset markets. Extending that capability into conventional financial markets remains more complicated, although the asset manager sees opportunities for investors to transfer fund holdings without first redeeming them for cash.
The development moves BlackRock’s discussion beyond issuing digital representations of traditional investment products. Its focus now includes how those assets could function within the systems financial institutions use to settle transactions, secure trading positions and manage available cash.
BlackRock sees tokenized funds becoming trading collateral
Collateral plays an established role in financial markets because banks, brokers and clearing firms require assets to secure loans, derivatives positions and other transactions. Investors commonly provide cash or eligible securities, with each receiving institution setting rules for the assets it will accept.
BlackRock sees a potential role for tokenized money market fund shares in that process. A tokenized share represents an interest in an investment fund while allowing certain transactions involving that interest to take place through blockchain infrastructure.
In the Bloomberg interview, Maley described the opportunity to bring tokenized funds into the traditional financial ecosystem. He distinguished the collateral arrangements already operating in cryptocurrency markets from the more difficult work of connecting blockchain-based assets with established financial systems.
Under the proposed model, an eligible investor could potentially pledge a tokenized fund position to support a trade without immediately redeeming the investment into cash. The investor’s continuing exposure and access to any applicable fund income would depend on the collateral arrangement, product terms and the institution holding the pledged assets.
Using fund shares as collateral is not a new financial practice, but BlackRock’s comments concern how tokenized versions could move and be managed through blockchain-based systems. No new clearinghouse agreement or traditional-market collateral launch was identified in the material reviewed for this report.
BlackRock’s BUIDL fund already backs trades on Binance
BlackRock has an operating example of tokenized collateral in the cryptocurrency market through its USD Institutional Digital Liquidity Fund, known as BUIDL. The fund launched in 2024 and uses Securitize’s infrastructure to issue blockchain-based representations of fund shares.
In November 2025, Securitize announced that Binance would accept BUIDL as off-exchange collateral for eligible institutional traders. The arrangement allowed participants to use qualifying fund holdings to support trading activity while retaining exposure to the underlying short-term Treasury investments.
Binance’s institutional framework separates the location of collateral from the exchange where trading takes place. Depending on the service, participating institutions can hold eligible assets through third-party custody arrangements while accessing the exchange’s markets.
The arrangement does not mean that every BUIDL holder can automatically pledge shares against any trading position. Eligibility depends on the exchange, custody service, client classification and applicable product restrictions.
In November, crypto.news previously covered BlackRock’s collateral integration with Binance and Securitize. The agreement established a specific trading venue accepting the fund, providing a documented example of collateral use beyond the issuance of a digital token.
The difference between the operating crypto-market arrangement and BlackRock’s latest traditional-finance ambition remains an important distinction. The material reviewed does not identify a conventional securities clearinghouse that has begun accepting BUIDL under a comparable new arrangement.
BlackRock’s USD 311 billion fund rollout expands tokenized cash access
BlackRock has continued introducing blockchain functionality across its cash management business, including a major European launch in August 2026. The firm created tokenized share classes for selected Institutional Cash Series money market funds using JPMorgan’s Kinexys asset-tokenization platform.
In its August 4 announcement, BlackRock confirmed that the rollout provided tokenized functionality to money market fund ranges with a combined USD 311 billion in assets under management. The figure describes the assets of the broader fund platform and does not establish that USD 311 billion worth of shares had been minted on Ethereum.
The program uses Ethereum-based digital tokens to represent interests in existing regulated money market funds. BlackRock’s announcement states that the official shareholder register continues to operate through the traditional transfer-agent infrastructure.
That arrangement allows approved investors to transfer eligible tokenized fund shares between authorized wallets while preserving the underlying fund’s established legal structure. BlackRock identified treasury management, liquidity management, digital collateral and institutional distribution as potential uses.
The European rollout includes sterling, euro and US dollar share classes across several institutional liquidity strategies. It covers government liquidity funds, Treasury investments and other short-term money market portfolios.
The fund manager has described round-the-clock transfers and near-real-time visibility as features of its on-chain share classes. Those technical capabilities do not, by themselves, mean that every bank, broker or clearing organization will accept the tokens as collateral.
An August European fund tokenization launch documented the Kinexys arrangement and the ability of eligible investors to move tokenized shares between approved wallets. The shareholder-register structure remains particularly relevant when distinguishing a blockchain transfer from the legally recognized ownership of a fund position.
Ondo brings BlackRock investment strategies into tokenized portfolios
BlackRock’s work with Ondo Finance provides another example of traditional investment products reaching blockchain users. In September 2026, Ondo launched three Intelligent Portfolios based on investment strategies developed by BlackRock for the platform.
Ondo introduced the products on September 24, making them available to eligible investors outside the United States in permitted jurisdictions. The initial portfolios covered high-income, diversified-growth and high-growth strategies.
Each token provides economic exposure to a portfolio assembled according to the relevant investment strategy. The tokens are issued through Ondo’s structure and should not be confused with direct ownership of the individual ETFs held within the underlying portfolios.
The launch was described in BlackRock-powered portfolio coverage, including the distinction between economic exposure and direct shareholder rights. Ondo said eligible investors could hold and transfer the portfolio tokens through compatible blockchain wallets and applications.
Although the three products show how investment strategies can be packaged into transferable blockchain instruments, the September launch did not establish their acceptance by traditional clearinghouses. No collateral agreement for these specific Ondo portfolios was identified in the announcements reviewed.
Traditional finance still requires collateral and custody agreements
The next operational question for BlackRock’s tokenization strategy concerns which financial institutions will accept specific tokenized fund shares to secure transactions. Banks and clearing organizations typically establish their own eligibility standards, valuation methods, custody arrangements and procedures for handling collateral when a counterparty defaults.
A blockchain token may allow an eligible holder to transfer an asset at any hour, but that does not automatically establish its treatment within a conventional settlement system. Market participants must determine how legal ownership, settlement finality and the rights of secured parties work alongside the underlying fund documents.
Tokenized money market funds remain investment funds with defined redemption procedures, permitted investors and underlying portfolio risks. The blockchain representation does not remove those conditions or guarantee continuous liquidity under every market circumstance.
BlackRock has already established a crypto trading collateral application through BUIDL and expanded access to tokenized fund shares through its European cash management business. The October 19 Bloomberg report did not identify a completed agreement with a traditional clearinghouse or specify which BlackRock fund would be accepted next.
The firm’s August announcement described digital collateral management as a potential application for its European on-chain share classes, while keeping the official records of ownership with the funds’ transfer agent. The announcement did not disclose the amount of European fund tokens currently pledged against transactions.
