BUIDL—the BlackRock USD Institutional Digital Liquidity Fund—invests in T-bills, repo agreements, and cash. It maintains a $1 per token value. It pays daily dividends. The mechanics are standard money market fund operations, unremarkable by any traditional measure.

What's remarkable is what's building on top of it.

Ethena Labs, issuer of the synthetic dollar USDe, holds $1.29 billion in BUIDL. That's 90% of the reserves backing their newer stablecoin, USDtb. Ondo Finance's OUSG—$770 million in tokenized Treasury exposure—runs on BUIDL as primary backing. Ondo calls itself "the largest holder" of the fund.

Binance, Crypto.com, and Deribit now accept BUIDL as trading collateral.

The pattern: DeFi protocols aren't adopting BUIDL. They're being absorbed into it.

The surface narrative frames BUIDL as "institutional adoption of crypto"—BlackRock bringing legitimacy to blockchain rails. This framing is backwards.

BUIDL is BlackRock capturing the reserve layer of on-chain finance.

The tokenized Treasury market grew from $3.9 billion to $9 billion since January 2025—a 127% increase. BUIDL captured nearly half that growth. Not by offering better yields (money market rates are money market rates) or lower fees (institutional pricing is institutional pricing). BUIDL won by becoming the asset that other products build on.

When Ethena needs compliant, yield-bearing reserves that exist natively on-chain, the options are limited. When Ondo needs institutional-grade backing that satisfies both DeFi composability requirements and traditional due diligence, the options narrow further. When exchanges need collateral that regulators won't question, the list gets very short.

BUIDL sits at the intersection of every requirement. That's not an accident.

The Securitize relationship reveals the strategy. BlackRock didn't just launch BUIDL through Securitize—they led Securitize's $47 million funding round in May 2024 and placed Joseph Chalom, their Global Head of Strategic Ecosystem Partnerships, on the board. Securitize is now going public via SPAC at a $1.25 billion valuation, with BlackRock rolling 100% of their equity into the combined company.

Securitize isn't a vendor. It's the only vertically integrated tokenization platform with SEC-registered transfer agent, broker-dealer, alternative trading system, and fund administration capabilities. They control 20% of the RWA tokenization market. BlackRock owns a piece of that.

Franklin Templeton launched tokenized Treasuries first. Their BENJI fund has $800 million in AUM and offers retail access through a mobile app. BUIDL overtook BENJI in April 2024—one month after launch—and the gap has only widened.

The difference: Franklin built a product. BlackRock built infrastructure.

BUIDL's $250,000 minimum investment isn't a bug. It's a filter. BlackRock doesn't want retail holders. They want to be the reserve asset that retail-facing products use as backing. Every dollar in Ethena's USDtb, every dollar in Ondo's OUSG, flows through BUIDL. The end users never touch the fund directly. They don't need to.

The obvious critique deserves acknowledgment: BUIDL is centralized. Investors trust BlackRock for asset management, BNY Mellon for custody, Securitize for on-chain record-keeping, and Circle for redemptions. Four intermediaries. Four points of trust.

For crypto purists, this defeats the purpose of on-chain assets.

For institutional allocators, this is the point.

Pension funds and corporate treasuries already trust these entities. BUIDL removes blockchain-specific risks—smart contract exploits, bridge failures, governance attacks—while preserving blockchain benefits: 24/7 settlement, programmable collateral, composability with protocols that pass compliance review.

The August 2025 outflows tested this. $447 million left in a single month—the steepest drawdown since launch. The redemptions processed through Circle's USDC mechanism exactly as designed. For risk committees evaluating tokenized assets, functional redemption infrastructure matters more than decentralization ideology.

The market is consolidating faster than headline AUM suggests. When Ethena and Ondo build reserves on BUIDL, and exchanges accept BUIDL as collateral, network effects compound. Alternative tokenized Treasury products face an increasingly difficult competitive position—not on yield or fees, but on composability. The protocols that matter are integrating BUIDL. Everything else becomes a second-tier option.

Direct BUIDL allocation requires $250,000 minimum and accredited investor status through Securitize. For smaller allocators, exposure comes through the products built on top: Ondo's OUSG, Ethena's USDtb, or the DeFi protocols that accept BUIDL-backed collateral.

The strategic question isn't whether to hold tokenized Treasuries. It's whether you're comfortable with BlackRock as the counterparty at the base of the stack.

BlackRock manages $14 trillion in total assets. BUIDL represents 0.02% of that—a rounding error on the balance sheet, a strategic wedge into on-chain settlement infrastructure.

Securitize's IPO will test whether the market values tokenization platforms as technology companies or financial infrastructure. If the SPAC closes at the $1.25 billion valuation, BlackRock's stake becomes worth watching. The SEC's Crypto Task Force received SIFMA's submission on tokenized securities regulation in December 2025. BUIDL's compliance architecture may become the template.

$2.9 billion is the current number. The number that matters is what percentage of on-chain dollar settlement eventually flows through BlackRock's infrastructure. Right now, among tokenized Treasuries, it's 45%. Among DeFi reserve assets backed by compliant yield-bearing instruments, the concentration is higher.

The settlement layer is being built. One fund is building it.