Fidelity Launches Innovative Ethereum-Based Treasury Fund 'OnChain'

Fidelity Investments has made a significant move in the financial sector by filing to register an Ethereum-based share class for its Treasury money market fund, named "OnChain." This initiative aims to enhance transparency and tracking of transactions, marking Fidelity's entry into the blockchain tokenization space alongside other major asset managers.

Key Takeaways

• Fidelity's OnChain will utilize Ethereum for tracking share transactions of its Treasury Digital Fund (FYHXX).

• The fund primarily invests in U.S. Treasury securities, maintaining traditional ownership records alongside blockchain records.

• The OnChain share class is pending regulatory approval and is expected to launch on May 30.

• This move reflects a growing trend of integrating blockchain technology into traditional finance.

Fidelity's OnChain Overview

Fidelity's OnChain initiative is designed to provide investors with a transparent and verifiable method of tracking their investments in the Fidelity Treasury Digital Fund. The fund, which currently manages approximately $80 million, primarily consists of U.S. Treasury bills.

The OnChain share class will record ownership on the Ethereum blockchain, while Fidelity will continue to maintain traditional book-entry records as the official ownership ledger. This dual-recording system aims to enhance the security and transparency of transactions, with Fidelity's transfer agent reconciling blockchain transactions daily.

Market Context

The move by Fidelity comes at a time when the market for tokenized U.S. Treasury securities is rapidly expanding, currently valued at around $4.78 billion. Other major players in this space include BlackRock and Franklin Templeton, who have also ventured into blockchain tokenization. BlackRock's tokenized T-bill fund, known as BUIDL, leads the sector with approximately $1.5 billion in assets.

Future Prospects

Fidelity's filing indicates that the OnChain share class may not only be limited to Ethereum but could potentially expand to other blockchain platforms in the future. This aligns with the broader trend of traditional financial institutions exploring blockchain technology to enhance their offerings and meet the evolving demands of investors.

Conclusion

Fidelity's introduction of the OnChain Ethereum-based share class for its Treasury money market fund represents a significant step towards integrating blockchain technology into traditional finance. As regulatory approval is awaited, the financial community is keenly observing how this initiative will unfold and its potential impact on the market for tokenized assets.

Sources

• Fidelity launches 'OnChain' Ethereum-tracked shares for Treasury money market fund, The Block.

• Fidelity files for Ethereum-based US Treasury fund ‘OnChain’, Cointelegraph.

• Fidelity Seeks SEC Approval for Ethereum-Integrated US Treasury Money Market Fund Hosted – Crypto News Bitcoin News, Bitcoin.com News.

• Fidelity introduces Ethereum-tracked 'OnChain' shares for Treasury money market fund, Crypto Briefing.