Fidelity Investments Moves to Tokenize Money Market Fund on Ethereum

According to Cointelegraph, Fidelity Investments has taken a significant step in the blockchain tokenization space by filing to register a tokenized version of its US dollar money market fund on the Ethereum network. This move aligns Fidelity with other major asset managers like BlackRock and Franklin Templeton, who have also ventured into blockchain tokenization. The filing, submitted on March 21 to the US Securities and Exchange Commission, outlines plans for a new share class named 'OnChain.' This initiative is designed to enhance transparency and provide verifiable tracking of share transactions for the Fidelity Treasury Digital Fund (FYHXX), an $80 million fund primarily composed of US Treasury bills. While the OnChain share class awaits regulatory approval, Fidelity anticipates its implementation by May 30. Despite the innovative approach, Fidelity will continue to maintain traditional book-entry records as the official ownership ledger. The secondary recording of the OnChain class on the blockchain will not serve as the official record of ownership. Instead, the transfer agent will reconcile these blockchain transactions with the official records on a daily basis. Fidelity has clarified that the US Treasury bills themselves will not be directly tokenized. The asset manager, which oversees $5.8 trillion, has indicated potential plans to expand OnChain to other blockchains in the future. The trend of asset managers turning to blockchain for tokenizing Treasury bills, bonds, and private credit has been growing over recent years. The market for real-world asset (RWA) tokenization of Treasury products is currently valued at $4.78 billion, with BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) leading at $1.46 billion, as reported by rwa.xyz. Ethereum remains the dominant network for tokenized RWAs, with over $3.3 billion worth of assets, followed by Stellar at $465.6 million. Robbie Mitchnick, BlackRock’s head of crypto, emphasized Ethereum's role as the 'natural default answer' for traditional finance firms seeking to tokenize RWAs onchain. He highlighted the value clients place on decentralization, credibility, and security, which are key advantages of Ethereum. Mitchnick shared these insights at the Digital Asset Summit in New York on March 20, underscoring Ethereum's continued prominence in the blockchain space.