- Fidelity expands into blockchain, joining BlackRock in Ethereum-based asset tokenization for greater efficiency in finance.
- Ethereum leads institutional tokenization, securing its role as the go-to blockchain for real-world asset (RWA) integration.
- Tokenized assets promise improved collateral management and capital efficiency, driving wider adoption in traditional finance.
Fidelity Investments is expanding into blockchain with an Ethereum-based “OnChain” share class for its US dollar money market fund. The $5.8 trillion asset manager joins BlackRock and Franklin Templeton in tokenizing financial assets. Fidelity filed with the US Securities and Exchange Commission on March 21. Pending approval, the OnChain share class will launch on May 30. The initiative reflects the rising demand for tokenized real-world assets (RWAs) within traditional finance.
Fidelity’s OnChain Share Class and Its Role in Blockchain
The OnChain share class will track transactions of the Fidelity Treasury Digital Fund (FYHXX), an $80 million fund invested mainly in US Treasury bills. However, traditional book-entry records will remain the official ownership ledger. Fidelity will reconcile blockchain transactions with its official records daily.
Fidelity clarified that US Treasury bills themselves will not be tokenized. Instead, the fund’s share transactions will be recorded on Ethereum. This approach aligns with other asset managers utilizing blockchain for enhanced transaction visibility and efficiency.
Ethereum Remains the Default Network for Tokenization
Ethereum continues to dominate institutional tokenization efforts. BlackRock’s head of crypto, Robbie Mitchnick, emphasized that Ethereum is the natural choice for traditional finance (TradFi) firms looking to tokenize RWAs. He highlighted its decentralization, security, and credibility as key advantages.
Currently, over $3.3 billion worth of RWAs are tokenized on Ethereum. Stellar follows with $465.6 million in tokenized assets. The broader RWA tokenization market for Treasury products is valued at $4.78 billion, with BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) leading at $1.46 billion.
The Future of Tokenized Assets in Traditional Finance
Fidelity’s move showcases the increasing integration of blockchain into mainstream finance. Cynthia Lo Bessette, Fidelity Digital Asset Management’s head, sees tokenization as transformative. She believes it can enhance transactional efficiency and capital allocation across markets.
Moreover, tokenized assets could optimize collateral management. Posting tokenized assets as non-cash collateral may streamline operations and boost capital efficiency. Consequently, more institutional players may explore blockchain for asset management.
