Securitize Proposes Adding BlackRock’s BUIDL Token as Collateral for Frax USD Stablecoin

Anna Martynova

Frax Finance, a decentralized stablecoin protocol, could soon integrate BlackRock’s BUIDL token as a reserve asset backing its soon-to-be-relaunched Frax USD stablecoin, if the new proposal passes its governance process. Securitize Markets, which acts as a transfer agent and broker-dealer for the BlackRock USD Institutional Digital Liquidity Fund and its BUIDL token, is the author of the Frax Finance governance proposal.

The proposal states that in addition to providing Frax USD with utility, relative safety, and convenience, Frax USD can significantly reduce counterparty risk for its reserves by working with BlackRock. If the proposal passes, Frax USD would follow the lead of stablecoins like Ethena’s USDtb by adopting the BUIDL token as a backing asset. BUIDL currently manages over $530 million in assets, mostly in short-term U.S. Treasury bills. While the proposal has not yet been put to a vote, early reactions from Frax Finance DAO members have been generally positive.

The proposal comes as the Frax core team plans to rename its main stablecoin to Frax USD (frxUSD), as outlined in a separate governance proposal, and introduce Staked Frax USD (sfrxUSD) as a yield counterpart. The proposal claims that the frxUSD token will allow direct conversion to fiat via a partnership with Paxos and could benefit from Frax Finance’s efforts to gain access to the U.S. Federal Reserve Master Account.

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