- Fidelity files for blockchain-based U.S. Treasury money market fund.
- The tokenized U.S. Treasury market grew 500% over the past year.
- Fidelity joins BlackRock and Franklin Templeton in tokenization efforts.
Fidelity Investments has registered its blockchain-based version of the U.S. dollar money market fund as it enters the rapidly growing tokenized assets market. The OnChain share class of the Fidelity Treasury Digital Fund (FYHXX) will use blockchain technology to enhance transfers and settlements. The fund will operate on the Ethereum network although more blockchains could be added in the future.
Fidelity Unveils Blockchain U.S. Treasury fund
The registration awaits regulatory approval and the product is set to become effective on May 30. Fidelity enters the market for tokenized U.S. Treasuries at a time when the market has witnessed 500% growth over the last year. Other financial institutions such as BlackRock and Franklin Templeton have launched similar products.
Fidelity is one of largest financial companies with $5.8 trillion assets under management. The OnChain fund will operate just like traditional financial funds because it will store U.S. Treasury securities and cash assets. However, blockchain technology speeds up transaction processes and enables faster settlement of payments compared to standard business procedures.
Fidelity launched its tokenized U.S. Treasuries product after the success of BlackRock’s BUIDL fund which accumulated about $1.5 billion since its launch. Franklin Templeton introduced its fund in 2021 and the product has since generated $689 million. The total value of tokenized U.S. Treasury securities currently stand at $4.77 billion and show signs of further growth.
Real World Assets Tokenization Trend
The adoption of blockchain technology within financial operations has increased because it delivers better operational efficiencies and cost reductions. The tokenization of conventional financial assets such as government bonds and funds helps companies enhance transparency and streamlines operations. Additionally, Blockchains offers around the clock and real-time settlements
Fidelity’s tokenized asset expansion operations extend beyond U.S Treasuries. Fidelity provides spot Bitcoin and spot ether exchange-traded funds (ETFs), with total assets of $16.5 billion and $780 million respectively. This indicates the company’s investment approach to embrace digital asset and blockchain technology in diverse forms.
Fidelity’s blockchain-based fund indicates increasing acceptance of digital assets in the financial industry. The transfer of traditional financial instruments on chain enhances higher operational efficiency and faster transactions in the sector. Major players such as Fidelity are expected to maintain this trend and establish their positions as leaders in RWAs tokenization market.