![[keyword]](https://www.uncannyfaith.com/wp-content/uploads/2025/01/BlackRocks-BUIDL-Fund-Supports-New-Frax-Finance-Stablecoin-to-Strengthen-1080x630.jpg)
BlackRock and Frax Finance Introduce frxUSD Stablecoin Backed by Institutional Assets
BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) is making significant strides in the digital asset space. This progress comes with Frax Finance’s approval of BUIDL as collateral for its newly rebranded frxUSD stablecoin, a move announced in January 2024.
What is frxUSD?
frxUSD is Frax Finance’s enhanced stablecoin, offering both direct fiat redemption and regulatory compliance. Frax Finance’s founder, Sam Kazemian, highlighted the innovation behind frxUSD, stating:
“frxUSD combines the transparency and programmability of blockchain technology with the trust and stability of BlackRock’s prime treasury offerings.”
The stablecoin will be backed by assets managed within BlackRock’s BUIDL fund, including cash reserves, U.S. Treasury bills, and repurchase agreements. This partnership aims to seamlessly integrate traditional finance with decentralized financial systems through robust transparency, with all transactions recorded on-chain. The integration also introduces improved fiat on-and-off ramping capabilities, bridging the gap between traditional and crypto ecosystems.
The Role of BUIDL in Digital Assets
BlackRock’s BUIDL fund has emerged as a pioneering leader in tokenized real-world assets, with over $400 million under management. The fund has expanded its reach, moving beyond Ethereum to other major blockchains, including Polygon, Avalanche, Optimism, and Arbitrum. These efforts are part of BlackRock’s strategy to position BUIDL as a versatile and reliable collateral asset within the crypto landscape.
BUIDL also underpins other innovative projects, such as the Ethena USDtb stablecoin, highlighting its growing influence in the decentralized finance (DeFi) ecosystem. Additionally, BlackRock is exploring the use of BUIDL as collateral for derivatives trading on centralized exchanges, further solidifying its role in the evolving digital economy.
Why Tokenized Assets are Gaining Momentum
The appeal of tokenized real-world assets, such as U.S. Treasuries, is rapidly growing within the blockchain ecosystem. Recent data indicates that over $3.5 billion worth of these assets has been tokenized on networks like Ethereum and Solana, reflecting the broader financial sector’s shift towards blockchain-enabled solutions. These tokenized investments offer unprecedented transparency and efficiency, fostering greater trust and accessibility for institutional investors.
Carlos Domingo, CEO of Securitize, summed up the transformative potential of tokenized assets by saying:
“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.”
A New Era of Finance
BlackRock’s expanding influence in the DeFi space, alongside partnerships with Frax Finance and others, underscores a broader industry trend towards merging traditional financial systems with blockchain technology. As institutional-grade investment options become more accessible through decentralized platforms, the next chapter of financial evolution is unfolding—one that blurs the lines between traditional and decentralized systems while prioritizing transparency, compliance, and efficiency.
This transformation represents a significant step toward mainstream adoption of blockchain-based financial solutions, making 2024 a pivotal year for tokenized assets and innovative stablecoin designs like frxUSD.