OKX Integrates BlackRock's $2.5B BUIDL Fund as Margin Collateral with Standard Chartered

Cryptocurrency exchange OKX has integrated BlackRock's $2.5 billion tokenized money market fund, BUIDL, into its collateral framework with Standard Chartered. This setup permits eligible institutional and VIP clients to utilize the fund as trading margin while it is held in off-exchange custody at the bank.

The initiative expands an existing partnership. Standard Chartered became an institutional custodian for OKX in the European Economic Area last year following regulatory approval in Luxembourg, marking the bank's EU entry as the Markets in Crypto-Assets framework took effect.

In a release, the companies stated clients can post BUIDL as collateral held by Standard Chartered when trading on OKX Middle East or deposit it directly on the exchange. They described this as the first such framework backed by a globally systemically important bank.

The arrangement aims to incorporate tokenized real-world assets into trading infrastructure, allowing a yield-bearing fund to serve as collateral under regulated custody. This addresses the issue of idle cash margin, which typically earns minimal returns, by allowing institutions to retain yield from a fund backed by U.S. Treasuries and repurchase agreements.

Rifad Mahasneh, CEO for OKX Middle East, North Africa and CIS, stated BUIDL is treated as fungible with dollar-based assets like stablecoins, with clients retaining "ownership of the asset and its yield."

The move intensifies competition among exchanges. Binance has integrated similar tokenized treasury products, including funds from BlackRock and Franklin Templeton, into its off-exchange collateral frameworks.

The BUIDL fund, tokenized by Securitize, invests in cash, U.S. Treasury bills, and repurchase agreements, with yield distributed on-chain. Standard Chartered acts as the off-exchange custodian, segregating client collateral, while OKX manages margining and liquidation. Mahasneh noted the structure aligns with traditional finance standards but did not elaborate on margin calls during market stress.