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Fidelity applies to tokenize its US Treasury fund on Ethereum, joining blockchain adoption in finance.
Fidelity Investments entered blockchain territory on a major level by applying to register tokenized shares of its US dollar-denominated money market fund, Fidelity Treasury Digital Fund (FYHXX), on the Ethereum blockchain. Other financial powerhouses such as BlackRock and Franklin Templeton had already set an example with other blockchain uses like tokenizing regular financial products like Treasury bills, bonds, and private credit. Fidelity's filing, made to the US securities regulator on March 21, describes the establishment of a new share class named "OnChain," which will allow for the tracing of transactions on the $80 million FYHXX fund, which is mainly made up of US Treasury bills.
The OnChain share class will bring openness and auditable tracking of share transactions on the blockchain. But Fidelity indicated that the blockchain version would not be the official ownership ledger. Rather, conventional book-entry records will be the official record, and the blockchain transactions will be reconciled daily. Notably, Fidelity stressed that the US Treasury bills themselves would not be tokenized directly; instead, only the share class of the fund will be tokenized.
The project, which is now awaiting regulatory approval, is set to launch on May 30. Fidelity said it could extend OnChain to other blockchains in the future, further bolstering the interoperability of its tokenized assets. Tokenization of real-world assets (RWAs) has been on the rise, with more than $3.3 billion worth of RWAs tokenized on Ethereum. This expanding interest is a testament to the rising demand in traditional finance (TradFi) for tapping into blockchain's decentralization, security, and transparency.
As the tokenization of RWAs keeps on growing, Ethereum continues to be the go-to blockchain for most financial institutions, including BlackRock, which has also adopted the network for its tokenization program. This marks an encouraging future for blockchain's integration into the financial mainstream.
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