BlackRock’s BUIDL fund explained: Why it matters for crypto and TradFi
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What is BlackRock’s BUIDL fund?
BlackRock USD Institutional Digital Fund, BUIDL, is BlackRock’s first tokenized money market fund. It enables these traditional financial products to be traded as cryptographic tokens on blockchains.
A money market fund is a mutual fund that invests in high liquidity, short-term debt instruments. These funds aim to provide investors with a place to park money temporarily, returning a level of income without massive capital appreciation. They typically include cash, cash equivalents and high-credit rating debt securities like US Treasurys.
Blackrock is the world’s largest asset manager. It now provides blockchain-based money markets via blockchains like Solana and Ethereum. Essentially, the firm has taken the idea of traditional money market funds and combined it with the distributed ledger and payment characteristics of blockchains.
The fund has reported explosive growth, rocketing from $667 million to $1.8 billion of assets under management in just three weeks. As of March 31, 2025, the fund continues to attract a steady inflow of capital, with an increasing number of crypto-savvy investors choosing to park their funds in BUIDL via the seven blockchains it currently operates on:
- Ethereum
- Solana
- Aptos
- Arbitrum
- Avalanche
- Optimism
- Polygon
The BUIDL launch marks one of the most significant institutional moves into mixing traditional finance (TradFi) and blockchain-based products. It signals another step in Blackrock’s crypto strategy towards mainstream financial acceptance of crypto and blockchain.
This institutional crypto adoption from a respected asset manager with trillions of dollars of assets under management further legitimizes the space and may trigger a new wave of capital inflows from institutional adoption.
How does BUIDL work?
BUIDL is a tokenized fund. It invests in dollar-equivalent assets like US Treasury bills, cash, and repurchase agreements. Investors buy and sell BUIDL tokens, which are pegged to the dollar and pay dividends daily to an investor’s wallet as new tokens every month.
Investors can enjoy earning yields while retaining the security of traditional finance instruments. It is a form of real-world asset tokenization (RWA) that involves creating a digital representation of an asset.
This digital representation is a blockchain-based token, similar to cryptocurrency, that can be traded on relevant decentralized networks. Traditional asset transfers usually take days to settle and have poor capital efficiency. Tokenized assets allow near-instant trades and settlements to speed up financial processes while enabling better automation for reduced costs.
A hybrid approach creates a TradFi and crypto bridge to give investors the best of both worlds with the stability of regulated financial products and the efficiency of blockchain.
Did you know? Part of Sky’s (formerly MakerDAO) $1 billion RWA allocation announced in 2024, Superstate secured a chunk (estimated $200 million–300 million) in March 2025, pushing its AUM past $400 million. The tokenized Treasury market’s $5 billion milestone supports this growth.
Why BUIDL matters for crypto
The BlackRock BUIDL fund ushers in the next level of institutional legitimacy to the crypto ecosystem. Regulated institutions and entities can now seamlessly enter the blockchain space with confidence, especially with proven chains like Ethereum and now Solana.
The fund demonstrates real-world practical use cases for blockchain beyond speculative investments. For many years, crypto investments were reserved for those brave enough to trade tokens directly or learn the intricacies of decentralized finance (DeFi).
The latter was often a risk too far for their precious investments. Adding to this, ambiguous regulation meant that these options were completely off-limits for institutional fund managers like BlackRock.
For years, crypto has been seeking the approval and legitimacy of traditional financial institutions. BUIDL isn’t just acceptance; it’s the green light for active participation from the world’s biggest financial player. The fund’s early success may be a potential catalyst for a swell of institutional investment as mainstream adoption grows.
BUIDL’s impact on traditional finance (TradFi)
The BUIDL fund is a high-profile example of how traditional finance products can be improved with tokenization and blockchain.
BUIDL demonstrates the design possibilities available to further tokenize money markets and RWAs.
“In the year since BUIDL’s launch, we’ve experienced significant growth in demand for tokenized real-world assets, reinforcing the value of offering institutional-grade products onchain,” said Carlos Domingo, CEO and co-founder of Securitize, the company partnered with Blackrock to bring BUIDL onto the Solana blockchain. “As the market for RWAs and tokenized treasuries gains momentum, expanding BUIDL to Solana — a blockchain known for its speed, scalability, and cost efficiency — is a natural next step.”
While the money market usually enables investors to earn yield from idle cash, traditional funds have trading limitations like limited operating hours. The introduction of blockchain versions gives 24-hour access and liquidity to investors.
Blackrock isn’t the only player in tokenized funds, either. Franklin Templeton released a similar blockchain product, which had grown to over a $600 billion market cap by February 2025, while Figure Markets launched an interest-bearing stablecoin called YLDS.
Did you know? Beyond traditional institutions, BUIDL has drawn interest from blockchain-native entities eager to leverage its onchain utility. A standout early investor is Ondo Finance, which reallocated $95 million from its own tokenized short-term bond fund into BUIDL within a week of its March 2024 launch.
Benefits of BUIDL for investors
Traditional money market funds have been in operation for decades, but BUIDL introduces several benefits, including speed and accessibility, to bring these financial products into the modern world of digital assets.
- Improved speed and efficiency: With a BUIDL crypto investment, settlement times are reduced compared to traditional finance. This eases administrative burdens and costs while delivering overall operational efficiency.
- Enhanced liquidity and accessibility: Investors are able to buy and sell their fund tokens 24 hours a day, seven days a week. There are no closed trading times or weekends so investors can always retain liquidity to enjoy better capital efficiency.
- New yield generation: With BUIDL seeking a stable $1 value per token, investors get daily accrued dividends paid into wallets as new tokens on a monthly basis. This may provide higher returns compared to traditional fixed-income investments.
- Transparency and security: All of BUIDL’s transactions and holdings are tokenized and registered on the relevant blockchains. This means everything is transparent for investors to enjoy more visibility and accountability of their assets.
Risks and challenges of BUIDL
BUIDL’s rapid growth is a positive sign for innovation between TradFi and blockchain. Still, it also introduces risks that many investors might not be familiar with. This is an important consideration for money markets as factors like liquidity and technological vulnerabilities are evolving.
Understanding these new elements is essential for investors:
- Liquidity issues: Liquidity is critical for any successful asset class, especially with derivative products. BUIDL does have some liquidity concerns with the investor base currently consisting of qualified investors, neglecting wide market adoption.
- Technical vulnerabilities: The foundation of BUIDL leverages Ethereum’s smart contracting capabilities to tokenize US Treasurys. Smart contract vulnerabilities here could expose the fund to failures and hacks.
- Market manipulation: Cryptocurrency is notoriously volatile, often due to market manipulation as profiteers run tactics like wash trading and pump-and-dump schemes. As a new tokenized product, BUIDL could be vulnerable to this type of risk with its limited trading volumes and liquidity.
- Counterparty risk: Blackrock is a secure financial institution with credibility. But counterparty risk is significant in crypto. For instance, if an exchange listing BUIDL faces financial distress, it could impact the token’s reliability.
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