Fidelity Joins Tokenization Race with Blockchain-Based U.S. Treasury Fund
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Fidelity Investments is all set to join the asset tokensiation race as it makes a move to tokenize its U.S. dollar money market fund.
In a recent filing with the U.S. Securities and Exchange Commission (SEC), the firm announced plans to create a blockchain-based version of its Fidelity Treasury Digital Fund (FYHXX). This move aims to tap into the rapidly growing tokenized asset market and use blockchain for more efficient transfers.
FYHXX Fund Set to Launch on EthereumFYHXX is an $80 million fund consisting almost entirely of US Treasury bills, which was launched late last year. The fund’s OnChain class currently operates on the Ethereum (ETH) network, with plans to expand to other blockchains in the future. The registration is pending regulatory approval, and the product is expected to launch on May 30.
The filing comes amid a growing trend where global banks and asset managers are adopting blockchain technology to tokenize traditional financial assets like government bonds, credit, and funds. This shift, known as tokenization of real-world assets (RWAs), offers the potential for enhanced operational efficiency, reduced costs, and the ability to settle transactions around the clock.
Fidelity, with $5.8 trillion in assets, is the latest financial giant to dive into the booming tokenized U.S. Treasuries market. Previously, BlackRock, in collaboration with Securitize, launched the BUIDL tokenized T-bill fund last March, quickly dominating the market with $1.5 billion in assets. Meanwhile, Franklin Templeton’s 2021 on-chain money market fund has gathered $689 million.
Over $3.3 billion worth of real-world assets (RWAs) have been tokenized on the Ethereum network, with Stellar following at $465.6 million. BlackRock’s head of crypto, Robbie Mitchnick, recently stated that Ethereum is the “natural default” for traditional finance (TradFi) firms looking to tokenize RWAs.
The entire tokenized U.S. Treasury market is booming, now worth $4.77 billion—a staggering 500% growth in just one year. Besides, Fidelity is also a leading issuer of spot Bitcoin and Ether ETFs in the U.S., with its FBTC ETF valued at $16.5 billion and FETH ETF at $780 million, based on SoSoValue data.
BlackRock’s BUIDL Fund Sparks Confidence Amid Regulatory ShiftThe U.S. regulatory environment held back the growth of tokenized securities for years, with crypto seen as too risky by banks. However, things are changing quickly with Donald Trump’s pro-crypto policies. BlackRock’s launch of the BUIDL fund marked a turning point, giving other firms the confidence to dive into the space.
Fidelity and others, like Visa and Mastercard, are now embracing tokenization, with Visa launching a platform for banks and Tether introducing its own tokenization platform. Mastercard is also using blockchain for business payments.
The Boston Consulting Group predicts tokenized assets could hit $600 billion by 2030. Besides, the CFTC is also exploring new guidelines, exploring how tokenized assets could be used as collateral in future trades.