Fidelity Tokenizes Treasuries—Challenging BlackRock in the Race to Rewrite Finance

Fidelity Investments has quietly introduced a tokenized treasury fund on the Ethereum blockchain, marking a significant development in the convergence of traditional finance and blockchain technology. The new offering, known as the Fidelity Digital Interest Token (FDIT), represents a blockchain-based share class of the Fidelity Treasury Digital Fund (FYOXX), which holds over $200 million in U.S. Treasury securities and cash at the time of its August 2025 launch [1]. Each FDIT corresponds to one share of the fund and is issued directly on the Ethereum network, reflecting Fidelity’s commitment to real-world asset (RWA) tokenization [1].

The launch of FDIT positions Fidelity as a direct competitor to BlackRock, whose BUIDL fund currently dominates the $7 billion tokenized Treasury securities market [1]. Fidelity charges a 0.20% management fee for the fund and has partnered with Bank of New York Mellon for custody of the underlying securities [1]. Despite the fund's substantial assets under management (AUM), its participant base remains limited, with only two token holders identified at the time of reporting: one owning approximately $1 million worth of tokens and the other controlling the remaining balance [1].

This move follows Fidelity’s earlier SEC filing seeking approval to add a blockchain-based share class to its digital treasury fund, signaling a broader strategic shift toward integrating blockchain solutions into institutional finance [1]. The company has not yet issued a public statement on the FDIT, but the product’s launch aligns with the growing trend of asset managers exploring blockchain technology to enhance market efficiency, reduce settlement times, and lower transaction costs [1].

The FDIT’s emergence also has implications beyond traditional fund management. For instance, it could influence crypto payroll integration for startups, particularly in Asia, by providing a regulated and liquid on-chain asset that facilitates quicker and more efficient payroll processes [2]. Additionally, fintech startups may draw insights from Fidelity’s approach, including the benefits of fractional ownership, stablecoin integration, and the importance of robust compliance and infrastructure in building trust within the tokenized asset space [2].

However, the integration of tokenized assets also presents challenges, particularly for small and medium-sized enterprises (SMEs) in Europe, where regulatory uncertainty and high integration costs may hinder adoption [2]. The fragmented nature of the regulatory environment increases legal and compliance risks, potentially limiting the benefits of tokenized assets for certain market participants.

As Fidelity continues to expand its digital finance offerings, the FDIT represents a strategic step in the evolution of asset tokenization. With the fund already attracting over $200 million in AUM, the FDIT’s long-term success will depend on broader market adoption and continued innovation in blockchain-based financial products [1].

Source: [1] Fidelity launches tokenized money market fund where financial backing is provided by BlackRock (https://medium.com/@compassInvestment/fidelity-launches-tokenized-money-market-fund-where-financial-backing-is-provided-by-blackrock-227ca699bbdf) [2] Fidelity's Tokenized Fund: FDIT's Impact on Crypto Payroll (https://www.onesafe.io/blog/fidelity-tokenized-fund-impact)