BlackRock is exploring how tokenized investment funds could be used as collateral in traditional financial markets, expanding the role of blockchain beyond issuing digital versions of existing financial products.
Dan Maley, BlackRock’s head of cash management for Asia Pacific, told Bloomberg on October 19 that the firm’s tokenized funds are already being used as collateral in digital-asset markets. Extending their use to conventional financial markets could be more complicated because banks, brokers and clearing firms have specific rules for accepting and managing collateral.
Tokenized money market fund shares could allow eligible investors to use their investments to secure trades without first redeeming them for cash. However, wider adoption will depend on custody arrangements, legal requirements and whether financial institutions agree to accept these assets.
BlackRock already has a tokenized collateral arrangement
BlackRock’s USD Institutional Digital Liquidity Fund, known as BUIDL, provides an existing example of tokenized fund shares being used as trading collateral.
Launched in 2024, BUIDL invests in short-term US Treasury securities and uses blockchain technology to represent fund shares digitally. Securitize provides the tokenization infrastructure.
In November 2025, Binance began accepting BUIDL as off-exchange collateral for eligible institutional traders. The arrangement allows qualifying clients to use their fund holdings to support trading while maintaining exposure to the underlying investments.
However, access is limited to eligible participants and depends on the applicable custody and trading arrangements. It does not mean every BUIDL holder can use the fund as collateral across all financial markets.
BlackRock’s broader goal is to extend similar capabilities into traditional financial markets, where institutions could potentially use tokenized fund shares to secure transactions without immediately converting their investments into cash.
BlackRock expands its tokenized money market funds
BlackRock has also expanded tokenization across its cash management business.
On August 4, the company announced tokenized share classes for selected European Institutional Cash Series money market funds using JPMorgan’s Kinexys platform. The fund ranges covered by the rollout manage a combined $311 billion in assets.
That figure represents the assets managed across the broader fund ranges, not the value of shares already tokenized on a blockchain.
The new share classes use Ethereum-based tokens to represent interests in existing regulated funds. BlackRock said the official shareholder register would continue to be maintained through traditional transfer-agent infrastructure.
Eligible investors can transfer tokenized shares between approved wallets, potentially making it easier to manage liquidity and move fund holdings. BlackRock has identified digital collateral management as one possible use for the technology.
However, blockchain transfers do not automatically make these shares acceptable to every bank, broker or clearinghouse. Institutions must still approve the assets and establish the rules for holding and using them.
Ondo introduces portfolios based on BlackRock strategies
Ondo Finance has also brought BlackRock investment strategies to blockchain users.
On September 24, Ondo launched three Intelligent Portfolios based on BlackRock-developed strategies. The portfolios target high income, diversified growth and high growth.
The products give eligible investors outside the United States access to tokenized portfolios through Ondo’s structure. Their tokens provide economic exposure to the relevant portfolios, but they should not be confused with direct ownership of the individual exchange-traded funds held within them.
The launch demonstrates another way traditional investment strategies can be made available through blockchain-based products. However, the announcement did not establish that these portfolio tokens are accepted as collateral by traditional financial institutions.
Traditional financial markets still need clear rules
BlackRock’s plans face several practical challenges. Banks, brokers and clearing organizations have their own requirements for collateral eligibility, asset valuation, custody and the handling of defaults.
A token may be transferable around the clock, but that alone does not determine its legal status or guarantee that a financial institution will accept it to secure a trade.
Tokenized money market funds also remain subject to their investment terms, redemption procedures and investor eligibility requirements. Moving a fund share onto a blockchain does not remove these conditions or guarantee liquidity in every market situation.
BlackRock already has a working collateral arrangement through BUIDL and has expanded tokenized fund access in Europe. The next step would be wider acceptance by traditional financial institutions.
The October 19 report did not identify a new agreement with a traditional clearinghouse or confirm when a tokenized BlackRock fund might become eligible for broader use as collateral. For now, the firm’s plans point to a possible expansion of blockchain technology into the systems that support trading, settlement and liquidity management.
