"It's being worked on," White said. "That fight is in the works."
Bout agreements are not signed, but both sides are interested in the rematch. TMZ reported that the bout is targeted for UFC 256 on Dec. 12.
The UFC is looking to book the rematch as the next bout for both Masvidal and Diaz, but a date has not been set. The fight could also take place in January, according to sources.
"[Masvidal] wants to defend [the BMF belt] against Diaz. They were the first two to fight for it, so he wants to put it up versus Nate again," White said.
Masvidal and Diaz squared off last November in the main event of UFC 244 at Madison Square Garden in New York for the inaugural BMF championship. Masvidal (35-14) defeated Diaz via TKO when ringside physicians stopped the bout after the third round because of a facial cut. Diaz protested the stoppage.
Masvidal, of Miami, went on to challenge Kamaru Usman for the welterweight championship at UFC 251 last month in Yas Island, Abu Dhabi, United Arab Emirates. Masvidal accepted the fight on short notice after Usman's original opponent, Gilbert Burns, was forced off the card at the last minute because of a positive COVID-19 test. Masvidal lost via unanimous decision.
Diaz (20-12) has not fought since the loss to Masvidal. The 35-year-old welterweight fought twice in 2019 after a three-year layoff. He defeated Anthony Pettis in August 2019 before losing to Masvidal in November.