BlackRock's BUIDL tokenized fund now accepted as institutional collateral on OKX
Cryptocurrency exchange OKX partners with Standard Chartered to enable institutional traders to post BlackRock's tokenized Treasury fund as collateral under regulated custody.
Digital asset exchange OKX has incorporated BlackRock's tokenized US Treasury fund BUIDL into its collateral system through a partnership with Standard Chartered, enabling qualified institutional and VIP users to utilize the interest-generating asset as margin for trading purposes while maintaining custody with the banking institution outside the exchange environment.
According to a Tuesday announcement provided to Cointelegraph, the setup permits institutional and VIP users to pledge BUIDL as collateral maintained with Standard Chartered for trading activities on OKX Middle East, or alternatively deposit the asset directly onto the exchange platform. The partnership has been characterized as the initial globally systemically important bank-supported off-exchange tokenized collateral system of its kind.
The development contributes to a wider market movement aimed at transforming tokenized real-world assets into functional market infrastructure components. Through enabling a yield-generating fund to serve as collateral while staying within regulated custodial arrangements, the system demonstrates how firms are working to enhance the utility of tokenized cash-equivalent assets in routine trading operations and risk management practices.
A primary catalyst for this transformation is a straightforward inefficiency inherent in traditional trading capital operations. Historically, cash deposited as margin on cryptocurrency exchanges has remained dormant, generating minimal or zero yield despite being committed as collateral. Through converting such cash into a tokenized money market fund supported by US Treasuries and repurchase agreements, this arrangement enables institutions to maintain capital productivity even as it continues to underpin their trading operations.
The system expands upon OKX's pre-existing collateral mirroring initiative with Standard Chartered, which debuted last year in support of the exchange's European market expansion efforts. The novel aspect, according to Rifad Mahasneh, CEO of OKX Middle East, North Africa and Commonwealth of Independent States, who spoke with Cointelegraph, involves showcasing how tokenized assets can be actively deployed within trading infrastructures instead of being held in a passive capacity.
Within OKX's margin framework, BUIDL receives treatment as interchangeable with USD, USDC and additional dollar-pegged stablecoins, Mahasneh explained, while users maintain complete ownership over the underlying asset along with its generated yield.
OKX targets institutional edge in tokenized collateral
This initiative intensifies OKX's competitive positioning against exchanges such as Binance, which has similarly incorporated tokenized treasury instruments, including BlackRock's BUIDL and Franklin Templeton's BENJI fund, into off-exchange collateral structures.
According to Mahasneh, the system is currently operational for qualified institutional and VIP customers via OKX Middle East, with expansion strategies contingent upon jurisdictional requirements and market demand.
He characterized the arrangement as distinctive in its combination of regulated custodial services, a prominent asset management firm and a G-SIB banking partner, noting that OKX represents "the only global digital asset exchange" to implement this particular type of framework.
BlackRock's BUIDL fund, which has been tokenized through Securitize, allocates capital into cash holdings, US Treasury bills and repurchase agreements, with yield payments distributed via blockchain technology, the release indicates.
Standard Chartered functions as the off-exchange custodial institution, maintaining client collateral in segregation from OKX's proprietary assets while the exchange administers real-time margining and liquidation procedures through its internal risk management systems, Mahasneh explained. He indicated that the framework conforms to traditional finance industry standards, although specific margin call protocols during periods of market volatility were not disclosed.