Fidelity Tests US Dollar-Pegged Stablecoin Amid Favorable Crypto Policy

Fidelity Investments is in the final stages of testing a US dollar-pegged stablecoin, marking a significant move into digital assets. This development comes amid a more favorable regulatory environment for cryptocurrencies under the current administration. The $5.8 trillion asset manager plans to launch the stablecoin through its cryptocurrency division, Fidelity Digital Assets. This initiative is part of a broader strategy to expand into crypto-based services, including the launch of an Ethereum-based “OnChain” share class for its US dollar money market fund.

The OnChain share class is designed to track transactions of the Fidelity Treasury Digital Fund (FYHXX), an $80 million fund primarily composed of US Treasury bills. Fidelity's March 21 filing with the US securities regulator indicates that the OnChain share class is pending regulatory approval and is expected to take effect on May 30. This move underscores Fidelity's commitment to integrating blockchain technology into its financial services.

Fidelity's push into stablecoins follows a broader trend among US financial institutions, which have been increasingly launching cryptocurrency-based offerings. This shift is partly driven by the administration's signals of a more supportive stance on crypto policy, aiming to make the US a global hub for blockchain innovation. The administration has indicated that crypto policy will be a national priority, which has encouraged more institutions to explore digital assets.

Fidelity's stablecoin initiative comes on the heels of a significant regulatory development. Cboe BZX Exchange, a US securities exchange, has requested permission to list a proposed Fidelity exchange-traded fund (ETF) holding Solana (SOL). This filing is seen as a "regulatory litmus test" for the SEC's attitude toward Solana ETFs. If approved, it would signal a maturing regulatory posture that recognizes the functional differentiation across blockchains, potentially accelerating the development of compliant financial products tied to next-generation assets.

Industry participants are also awaiting US stablecoin legislation, which may come in the next two months. The GENIUS Act, an acronym for Guiding and Establishing National Innovation for US Stablecoins, aims to establish collateralization guidelines for stablecoin issuers while ensuring full compliance with Anti-Money Laundering laws. A positive sign for the industry is that the stablecoin bill may be on the president’s desk in the next two months, according to the executive director of the president’s Council of Advisers on Digital Assets. This legislation could provide a clearer regulatory framework for stablecoins, further encouraging their adoption and integration into the financial system.