In a significant move within the financial technology sector, Fidelity Investments has officially filed to register a tokenized version of its US dollar money market fund on the Ethereum blockchain. This initiative aligns Fidelity with major players in the industry, including BlackRock and Franklin Templeton, who have also ventured into the realm of blockchain tokenization.
On March 21, Fidelity submitted its application to the US Securities and Exchange Commission (SEC) for a new fund named ‘OnChain.’ This fund is designed to enhance the tracking of transactions for the Fidelity Treasury Digital Fund (FYHXX), which currently boasts assets nearing $80 million, predominantly composed of US Treasury bills.
While Fidelity awaits regulatory approval, it has indicated that the OnChain fund could be operational by May 30. The share class for OnChain is specifically intended to give investors greater transparency regarding their share transactions related to FYHXX. However, Fidelity will continue to maintain traditional book-entry records for official ownership purposes.
“Although the secondary recording of the OnChain class on a blockchain will not represent the official record of ownership, the transfer agent will reconcile the secondary blockchain transactions with the official records of the OnChain class on at least a daily basis.”
An important aspect of Fidelity’s approach is that the US Treasury bills themselves will not be directly tokenized. This development signals Fidelity’s ongoing commitment to integrating advanced technologies into asset management.
Fidelity, a titan in the asset management arena with approximately $5.8 trillion in assets, has suggested a potential expansion of the OnChain model to other blockchain platforms in the future. The current landscape of asset managers delving into blockchain technology reflects a growing trend towards the tokenization of various financial instruments, including Treasury bills, bonds, and private credit.
The RWA (Real World Asset) tokenization market for Treasury products is estimated to hold a valuation of approximately $4.78 billion, with prominent contributions from the BlackRock USD Institutional Digital Liquidity Fund, which alone is valued at around $1.46 billion.
Recent reports emphasize that over $3.3 billion in Real World Assets have already been tokenized on the Ethereum network, followed by Stellar, which has seen about $465.6 million in tokenized assets.
Robbie Mitchnick, BlackRock’s head of crypto, recently expressed confidence in Ethereum as the primary choice for traditional financial firms seeking to tokenize their Real World Assets. During the Digital Asset Summit in New York on March 20, he stated, “There was no question that the blockchain we would start our tokenization on would be Ethereum, and that’s not just a BlackRock thing, that’s the natural default answer.” He further acknowledged the advantages that Ethereum offers in terms of decentralization, credibility, and security.
As the financial services industry continues to explore the potential of blockchain technology, Fidelity’s OnChain initiative represents a promising advancement in integrating traditional finance with innovative technological solutions.
