QCP, a digital asset market maker in Singapore, said it executed the first derivatives trade using a tokenized fund from BlackRock as collateral, as improving collateral mobility has been identified as one of the biggest potential benefits of finance moving to distributed ledger technology.

BlackRock launched its USD Institutional Digital Liquidity Fund (BUIDL) on the ethereum blockchain in March 2024 in partnership with Securitize, the real-world asset tokenization platform.  BUIDL invests in cash, US Treasury bills, and repos.

QCP described the derivatives transaction as “groundbreaking” in a blog as it enabled Securitize Credit to integrate BUIDL into their portfolio, while earning an enhanced yield.

We’re proud to be the first designated market maker for #BUIDL (@BlackRock) and to execute the first BUIDL-collateralized derivatives trade with @Securitize Credit.

Now available to institutional clients, this solution unlocks enhanced yields and portfolio efficiency.

Read… pic.twitter.com/JMDq6U2MOU

— QCP (@QCPgroup) January 9, 2025

In digital finance stablecoins have been used to transfer value and liquidity 24/7/365 seamlessly around the globe, in contrast to a fiat currency such as the US dollar that is used in traditional banking. Stablecoins are a type of cryptocurrency designed to maintain a stable price over time by pegging its value to a reference asset such as a fiat currency or a commodity. They are backed by collateral but do not provide investors with yield.

The emergence of tokenized treasuries, led by assets like BUIDL, represents the next chapter in on-chain financial innovation according to QCP, as investors can retain yield and turn passive holdings into active contributors to portfolio performance.

For example, BUIDL returns a native yield of 4.25%. Securitize said in a blog that at the time of the trade, six-month bitcoin basis (long spot, short 27JUN25 futures) collateralized with stablecoins was trading at 11.95% per annum. Posting BUIDL as collateral increased yield to 15.03% per annum.

“Because of BUIDL’s high-quality, minimal risk standing in the marketplace, we were able to further sell $50,000 bitcoin puts against the position – a ~50% decline from spot, for an additional 3.6% per annum, for a total yield of 18.63% per annum,” added Securitize.

Still Collateralizing Your Trades with Stablecoins? There's a new way forward.

Our latest blog dives into the first derivatives trade using BUIDL as collateral, allowing Securitize Credit to explore enhanced yield strategies via @QCPGroup.

The next phase of on-chain finance is… pic.twitter.com/iwhYNynlSt

— Securitize (@Securitize) January 9, 2025

“As tokenized treasuries like BUIDL continue to gain traction, the digital asset ecosystem stands on the brink of a transformative era,” added QCP. “The question now is not if, but how quickly, the rest of the financial ecosystem will adopt.”

QCP said it is exploring how BUIDL can be further transformed into a fixed yield instrument through interest rate swaps.

Securitize said BUIDL’s utility as collateral introduces a paradigm shift. The blog said: “Trading desks can leverage tokenized treasuries to potentially access better returns while maintaining operational efficiency.”

Galaxy has predicted that the dominance of Tether’s stablecoin, USDT, will drop below 50% as it is challenged by yielding alternatives including BUIDL in the digital asset and blockchain firm’s 23 Predictions for Crypto in 2025.

There have been moves to improve collateral mobility through the use of DLT. In November 2024 the CFTC’s global markets advisory committee (GMAC) recommended that the use of non-cash collateral should be expanded through the use of distributed ledger technology. Importantly, the recommendation does not require any regulatory action or changes to collateral eligibility rules.

The recommendation said DLT can help reduce or eliminate some of the operational challenges of using non-cash collateral without requiring any changes to collateral eligibility rules. In addition, the recommendation provides a legal and regulatory framework for how market participants can apply their existing policies, procedures, practices, and processes to support use of DLT for non-cash collateral in a manner consistent with margin requirements.

Caroline Pham, CFTC Commissioner, said at the time: “This marks a significant first step toward realizing these opportunities for our derivatives markets — with exactly the same guardrails and protections in place.”

Frank La Salla, president, chief executive and director of DTCC, the US post-trade infrastructure, said in his predictions for 2025 technologies such as blockchain and the cloud will play a crucial role in the build out and interconnectedness of the digital financial ecosystem.

“DTCC will continue to serve as a strategic partner to the industry by advancing acceptance and adoption of digital assets, focusing on opportunities to tokenize collateral and funds, and leveraging our existing clearing and settlement capabilities to facilitate the listing of digital funds on exchanges as well as secondary trading,” he added.

Nadine Chakar, global head of DTCC Digital Assets, said in her predictions for 2025 the merits of blockchain technology have been proven and it is time to put real applications on the ledger using tokenization.  DTCC launched a sandbox, the DTCC Digital Launchpad, in 2024 to bring together financial market participants and enable the scalable adoption of digital assets.

“In 2025, we will continue to focus on establishing the digital market infrastructure of the future, showcasing how we can deliver the same efficiencies for digital assets as we do in traditional markets today, while also ensuring smooth market operation, transparency and liquidity,” she added.