Fidelity Investment has joined the asset tokenization race by filing to register a blockchain version of the U.S. dollar money market fund. If it gains regulatory approval, Fidelity hopes to jostle with BlackRock, whose product has a leading share of the market.
Regulations Paves Way for Blockchain-Based Treasury Fund
As per the filing with the Securities and Exchange Commission (SEC), the asset manager is seeking to register an on-chain share class of Fidelity Treasury Digital Fund (FYHXX) and utilize blockchain as a transfer agent.
Notably, FYHXX launched last year, holds both U.S. Treasury securities and cash. At the moment, the on-chain class of the funds uses the Ethereum network. However, the asset manager has plans to expand to other notable blockchains in future.
If the SEC nods, the product could become effective on May 30.
Growing Competition in the Tokenized U.S. Treasuries Market
Interestingly, global banks and asset managers have begun to make a shift as they put traditional financial instruments like credit, government bonds, and funds on blockchains. This development, tokenizing real-world assets (RWAs), aligns with their quest for operational efficiency and 24/7 settlements.
With its $5.8 trillion in assets under management (AUM), Fidelity Investment has become the latest financial giant seeking a slice of the fast-growing tokenized “pie” in the U.S. Treasuries sector.
A notable leader, BlackRock, in collaboration with digital asset firm Securitize, launched a tokenized T-bill fund termed BUIDL in March 2024. The product has grown to approximately $1.5 billion in assets.
Meanwhile, Franklin Templeton’s fund, the first to debut on the on-chain money market, raked in $689 million in assets since its launch in 2021.
Fidelity Investment’s Crypto Success
Data from RWA.xyz puts the tokenized U.S. Treasury market at $4.78 billion. The market has grown by 3.4% in the last seven days, and the growth rate for the past year has been estimated at almost 500%.
Analysts expect Fidelity Investment’s entry to fuel more growth in the sector as more institutional players embrace asset tokenization. It is worth noting that Fidelity is one of the largest spot Bitcoin exchange-traded fund (ETF) issuers.
Time will tell how it does in the asset tokenization space. However, many predict Fidelity could succeed.
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