Catenaa, Saturday, January 4, 2025 – BlackRock’s BUIDL token has been approved as a backing asset for Frax Finance’s new stablecoin, frxUSD.
The decision follows a governance proposal submitted by Securitize, the broker-dealer managing BlackRock’s tokenized money market fund, which was endorsed by Frax’s decentralized autonomous organization (DAO).
The frxUSD stablecoin, backed by assets held in the BUIDL fund—including cash, US Treasury bills, and repurchase agreements—marks a significant partnership. The stablecoin will allow direct fiat currency conversions through a collaboration with Paxos, boosting its accessibility and utility.
According to Frax, the initiative aims to enhance trust in stablecoins by tying them to secure, regulated assets. The proposal’s approval comes amidst Frax’s broader efforts to obtain access to a US Federal Reserve Master Account, which could elevate its stature in the financial system.
Frax is not alone in utilizing BlackRock’s BUIDL fund for stablecoin backing. Ethena’s USDtb token also leverages the fund, underscoring a trend of aligning stablecoins with institutional-grade financial instruments.
The move highlights the growing role of traditional financial giants like BlackRock in the cryptocurrency ecosystem. It also signals a shift toward regulated, asset-backed digital currencies to address concerns about stability and transparency in the sector.
