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BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) has deepened its position within the digital asset space as Frax Finance approved it as collateral for its soon-to-be-launched frxUSD stablecoin, according to a Jan. 2 statement.

frxUSD is Frax Finance‘s newly rebranded stablecoin that offers direct fiat redemption and enhanced regulatory compliance.

Sam Kazemian, Founder of Frax Finance, said:

“frxUSD combines the transparency and programmability of blockchain technology with the trust and stability of BlackRock’s prime treasury offerings.”

With this partnership, BUIDL will function as a primary reserve asset, backing the minting and redemption of frxUSD. The stablecoin will be supported by assets managed within BlackRock’s BUIDL, including cash holdings, US Treasury bills, and repurchase agreements.

This structure promises robust transparency, with all transactions recorded on-chain. Additionally, it introduces unique fiat on-and-off ramping capabilities, seamlessly connecting traditional and decentralized financial systems.

BlackRock’s BUIDL fund has emerged as a leader in the tokenized real-world assets sector, with over $400 million under management.

Over the past months, BUIDL has extended its reach beyond Ethereum to blockchains such as Polygon, Arbitrum, Avalanche, Optimism, and Aptos. It also backs other projects, including Ethena’s USDtb stablecoin.

Also, efforts are underway to further its integration into the crypto landscape through partnerships that position the fund as collateral for derivatives trading on centralized exchanges.

These developments align with BlackRock’s strategy to make institutional-grade investment options more accessible through decentralized platforms.

BUIDL’s growth is unsurprising, considering tokenized real-world assets are increasingly gaining traction across blockchain ecosystems.

According to Dune analytics data, over $3.5 billion of these assets have been tokenized on networks like Ethereum, Solana, and Polygon. This growing adoption reflects the financial sector’s ongoing shift towards blockchain-enabled solutions.

Carlos Domingo, CEO of Securitize, stated:

“Tokenized real-world assets provide an excellent bridge between traditional finance and decentralized finance, bringing institutional-grade investments on-chain with unprecedented transparency and efficiency.”

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