Copper to Offer Custody Services for Tokenized Money Market Funds Such as BlackRock’s BUIDL

As a seasoned researcher with a background in both traditional finance and blockchain technology, I find this development to be a significant stride towards the convergence of TradFi and DeFi. The regulatory approval granted to Copper by the FSRA is a testament to the maturing cryptocurrency landscape, particularly in regions like Abu Dhabi that are embracing digital assets.

According to Copper, they can now provide their clients with secure storage and trading of money market fund tokens like Blackrock’s BUIDL. This announcement was made in a press release on Wednesday.

Clients utilizing copper platforms now have an additional option for collateral in derivatives transactions: tokenized money market funds, which have been approved as such by the Financial Services Regulatory Authority (FSRA) in Abu Dhabi. This information was shared by the London-based company.

The business has formed alliances with significant players in the field of tokenization, such as Securitize, Franklin Templeton, Ondo, and Hashnote. Notably, Securitize serves as the transfer agent and tokenization platform for Blackrock’s USD Institutional Digital Liquidity Fund, which is issued on the Ethereum blockchain and symbolized by the BUIDL token.

In simpler terms, Tokenized Treasuries are electronic versions of U.S. government bonds that exist on blockchains. These digital representations enable them to be traded like tokens across networks such as Ethereum, Stellar, Solana, and Mantle. Financial companies and traditional finance giants are competing to transfer assets like government bonds, private loans, and money market funds onto blockchain systems. This move aims to enhance operational efficiency and speed up transactions.

If the Federal Reserve decides to maintain high interest rates over an extended period, these tokenized money market funds could potentially boost returns for participants in the derivative market. This is because they would be earning income from the collateral they provide to their counterparties, as noted by Amar Kuchinad, CEO of Copper, in his emailed remarks.

This year, the market for tokenized Treasuries has experienced an impressive growth spurt, escalating from approximately $780 million in January to about $2.3 billion, as reported by data from rwa.xyz.

Last month, the position of global CEO was taken over by Kuchinad, who previously served as an advisor for the Securities and Exchange Commission.