Tokenized Treasury Assets: Fidelity's FDIT and the Race to Outpace BlackRock's BUIDL

The tokenization of real-world assets (RWAs) is no longer a speculative experiment—it's a $24 billion market, with institutional players like Fidelity and BlackRock leading the charge. Fidelity's recent launch of the Fidelity Digital Interest Token (FDIT), which surpassed $200 million in assets under management (AUM) in just over a month, marks a pivotal moment in the race to tokenize U.S. Treasury securities. Yet, FDIT's early success must be viewed through the lens of its direct competitor: BlackRock's BUIDL fund, which dominates the space with $2.9 billion in AUM. This article unpacks the strategies, challenges, and implications of these two funds for the future of institutional-grade tokenized assets.

Fidelity's FDIT: A $200M Milestone with a Caveat

Fidelity's FDIT, launched on August 4, 2025, represents shares in the Fidelity Treasury Digital Fund (FYOXX), a vehicle fully backed by U.S. Treasuries and cash equivalents. The fund's Ethereum-based structure offers 24/7 transferability and a 0.20% annual management fee, undercutting BUIDL's Ethereum-based fee of 0.50%. Despite these advantages, FDIT's adoption has been... sparse. As of its $200M milestone, only two holders exist: one with $1 million and another with the remaining $199 million.

This minimal participation raises questions. Is FDIT's early success a sign of cautious optimism or a reflection of limited institutional appetite for tokenized Treasuries? Fidelity's strategy appears to prioritize infrastructure over immediate scale, positioning FDIT as a proof-of-concept for its broader RWA ambitions. The fund's Ethereum-centric focus also aligns with Fidelity's long-term bet on the network's institutional-grade security and developer ecosystem.

BUIDL's Dominance and Recent Challenges

BlackRock's BUIDL fund, by contrast, has become the gold standard in tokenized Treasuries. As of August 2025, it manages $2.9 billion in AUM, with 88 institutional holders each investing a minimum of $5 million. BUIDL's expansion to five additional blockchains—Aptos, Arbitrum, Avalanche, Optimism, and Polygon—demonstrates its commitment to liquidity and accessibility. However, the fund recently faced a $447 million outflow over 30 days, a stark contrast to its 18-month streak of record inflows.

This outflow coincided with broader market dynamics, including redemptions from other tokenized Treasury products. Yet, BUIDL's diversified blockchain strategy and institutional-grade compliance remain its key strengths. Large players like Ethena Labs ($1.29 billion in holdings) and Ondo Finance have integrated BUIDL into their liquidity strategies, underscoring its role as a cornerstone of the tokenized asset ecosystem.

The FDIT vs. BUIDL Rivalry: What's at Stake?

The competition between FDIT and BUIDL reflects a broader tension in the tokenized RWA market: specialization vs. scale. Fidelity's FDIT offers a lower fee and Ethereum-native simplicity, appealing to institutions seeking streamlined access to Treasuries. BlackRock's BUIDL, meanwhile, leverages its multi-chain presence and larger AUM to provide greater liquidity and flexibility.

FDIT's minimalist approach could pay off if Ethereum's institutional adoption accelerates, but it risks being overshadowed by BUIDL's broader appeal. Conversely, BUIDL's recent outflows highlight the volatility inherent in tokenized assets, even as they gain traction. For investors, the key takeaway is that both funds are testing the boundaries of blockchain's utility in traditional finance—FDIT as a niche innovator and BUIDL as a market leader navigating growth pains.

Implications for Institutional Adoption

The FDIT and BUIDL experiments signal a maturing market for tokenized RWAs. Fidelity's entry validates Ethereum's role in institutional finance, while BlackRock's expansion underscores the importance of cross-chain interoperability. For traditional asset managers, the lessons are clear: tokenization isn't just about cost savings—it's about redefining liquidity, settlement, and access in a digital-first world.

However, challenges remain. FDIT's limited holder base and BUIDL's recent outflows highlight the need for clearer regulatory frameworks and investor education. As the market evolves, the winner may not be the fund with the largest AUM, but the one that best balances innovation with institutional trust.