Fidelity Files for Blockchain-Based Money Market Fund

Fidelity Investments has filed with the U.S. Securities and Exchange Commission to register a tokenized version of its U.S. dollar money market fund, marking a significant entry into the blockchain technology space. The new fund, named "OnChain," is a share class of the Fidelity Treasury Digital Fund (FYHXX), which consists almost entirely of U.S. Treasury bills. The OnChain class aims to provide investors with transparency and verifiable tracking of share transactions, although traditional book-entry records will remain the official ownership ledger. Fidelity will reconcile the blockchain transactions with the official records on at least a daily basis. The U.S. Treasury bills themselves will not be directly tokenized.

Fidelity's move aligns with a broader trend among asset managers to tokenize traditional financial instruments using blockchain technology. This shift is driven by the potential for operational efficiency and faster settlements, key advantages of blockchain. The OnChain class currently utilizes the Ethereum network, with Fidelity indicating potential plans to expand to other blockchains in the future. This flexibility allows Fidelity to adapt to the evolving landscape of blockchain technology and capitalize on its benefits. The fund, which launched last year, holds cash and U.S. Treasury securities, providing investors with a stable and secure investment option. The tokenization of this fund represents a significant milestone in the integration of blockchain technology into traditional financial markets, offering investors a new way to access and manage their assets.

Fidelity's filing is pending regulatory approval, with effectiveness expected on May 30. The asset manager, which oversees $5.8 trillion in assets, is already a leading issuer of spot bitcoin and ether ETFs, further solidifying its position as a pioneer in the digital asset space. The OnChain share class aims to provide investors with transparency and verifiable tracking of share transactions of FYHXX, although Fidelity will maintain traditional book-entry records as the official ownership ledger. The secondary recording of the OnChain class on a blockchain will not represent the official record of ownership, but the transfer agent will reconcile the secondary blockchain transactions with the official records of the OnChain class on at least a daily basis.