Fidelity Files for Blockchain-Based U.S. Treasury Fund, Joins Tokenized Market Boom

Fidelity Investments, a prominent U.S.-based asset manager, has taken a significant step into the tokenized asset market by filing with the U.S. Securities and Exchange Commission (SEC) to register a blockchain-based version of its U.S. dollar money market fund. This new fund, known as the "OnChain" share class of the fidelity Treasury Digital Fund (FYHXX), aims to leverage blockchain technology for more efficient transfers and settlements. Currently, the fund operates on the Ethereum network, with plans to potentially expand to other blockchains in the future. The registration is pending regulatory approval and is set to become effective on May 30.

With $5.8 trillion in assets under management, Fidelity's entry into the tokenized U.S. Treasury market positions it as a major player in this rapidly growing sector. The asset management firm joins other industry giants such as blackrock and Franklin Templeton, which have already launched similar tokenized funds. BlackRock's BUIDL fund, for example, has accumulated nearly $1.5 billion in assets since its launch in March 2024, while Franklin Templeton's fund has gathered $689 million. The entire tokenized U.S. Treasury market is currently valued at $4.77 billion, reflecting a nearly 500% growth over the past year.

Fidelity's move is part of a broader trend where traditional financial instruments are being tokenized to achieve operational efficiencies and faster settlements. By utilizing blockchain technology, Fidelity aims to provide a more streamlined and efficient investment experience for its clients. The OnChain share class of the Fidelity Treasury Digital Fund will hold cash and U.S. Treasury securities, similar to its traditional counterpart, but with the added benefit of blockchain-based transfers.

The tokenization of real-world assets (RWAs) is gaining traction due to its numerous advantages, including reduced operational costs, enhanced transparency, and the ability to settle transactions around the clock. This trend is driven by the need for faster and more efficient financial transactions, which blockchain technology can facilitate. Fidelity's entry into this space underscores the growing acceptance of blockchain and digital assets within the traditional financial sector.

Ask Aime: How does Fidelity's blockchain-based U.S. Treasury Digital Fund impact the tokenized U.S. Treasury market?

Fidelity's involvement in tokenized assets extends beyond U.S. Treasuries. The company is also one of the largest issuers of spot bitcoin and ether exchange-traded funds (ETFs) in the U.S., with its FBTC and FETH funds holding $16.5 billion and $780 million in assets, respectively. This diversification into various digital asset classes highlights Fidelity's commitment to embracing the future of finance, which increasingly involves blockchain and tokenization.