Fidelity Joins Crypto Wave with Ethereum-Based Treasury Fund

Fidelity Investments has submitted a registration application for a tokenized edition of its US dollar money market fund on the Ethereum blockchain. The action comes after comparable efforts by leading asset managers like BlackRock and Franklin Templeton, indicating a growing institutional interest in financial products based on blockchain technology.

Fidelity Introduces “OnChain” for Blockchain-Based Tracking

On March 21, Fidelity filed with the US Securities and Exchange Commission (SEC) to introduce “OnChain,” a blockchain-based share class for its Fidelity Treasury Digital Fund (FYHXX). The fund, which manages around $80 million in assets, focuses mainly on US Treasury securities.

While the tokenized shares will be recorded on Ethereum, Fidelity has clarified that the official record of ownership will still be maintained through traditional book-entry systems. The transfer agent will reconcile blockchain transactions with these official records daily. Fidelity also stated that it may expand the fund’s blockchain compatibility beyond Ethereum in the future.

No Direct Tokenization of US Treasury Bills

Fidelity has specified that the fund itself will not hold cryptocurrencies or directly tokenize US Treasury securities. Instead, 99.5% of its assets will remain in Treasury securities and cash, maintaining a conventional investment approach while leveraging blockchain technology for transparency.

According to the SEC filing, the fund has no existing agreement to enable secondary market trading for OnChain class shares but may establish one later. Investors will require a blockchain wallet to hold these shares, though Fidelity has yet to reveal specific trading details.

Ethereum Remains the Preferred Blockchain for Tokenization

Ethereum continues to be the top choice for asset managers looking to tokenize real-world assets (RWAs). BlackRock’s head of crypto, Robbie Mitchnick, recently stated that Ethereum remains the “natural default answer” for traditional finance firms interested in blockchain-based asset management.

Mitchnick affirmed at the Digital Asset Summit in New York on March 20 that Ethereum was the clear choice for launching their tokenization efforts. He emphasized that Ethereum’s strong decentralization, established credibility, and robust security set it apart from other blockchain networks.

According to rwa.xyz, the market for tokenized Treasury products currently stands at $4.78 billion, with BlackRock leading at $1.46 billion. Over $3.3 billion in tokenized RWAs are on Ethereum, followed by Stellar at $465.6 million.

Ethereum’s Price Reacts to Fidelity’s Announcement

Following the news of Fidelity’s move into blockchain-based funds, Ethereum’s price saw a slight increase of over 3.5%, trading at $2,096 at press time. The announcement comes at a time when institutional interest in blockchain technology is rising despite market fluctuations.

Fidelity’s filing also follows its previous application for an Ethereum-based exchange-traded fund (ETF) that includes staking. With nearly $6 trillion in assets under management, the firm’s entry into blockchain tokenization could influence broader adoption among traditional financial institutions.