Fidelity Investments Seeks to Launch tokenized U.S. Treasury Fund "OnChain" on Ethereum

Fidelity Investments, a global asset management giant, has filed an application with the U.S. Securities and Exchange Commission (SEC) to register a tokenized version of its U.S. dollar money market fund on the Ethereum blockchain. This move places Fidelity among major players like BlackRock and Franklin Templeton in blockchain-based tokenization.

According to the filing submitted on March 21, the proposed tokenized product, named "OnChain," will enable tracking of transactions for the Fidelity Treasury Money Market Fund (FYHXX).FYHXX was launched by Fidelity last year and predominantly invested in U.S. Treasury securities. Now, FYHXX manages approximately $80 million in assets.

Although OnChain is still pending regulatory approval, Fidelity anticipates that the product will be launched on May 30. The OnChain share class is designed to offer investors greater transparency and robust tracking of FYHXX transactions. Importantly, Fidelity will retain traditional bookkeeping records as the official ledger of ownership.

"Although the secondary recording of the OnChain class on a blockchain will not represent the official record of ownership, the transfer agent will reconcile the secondary blockchain transactions with the official records of the OnChain class on at least a daily basis,"Fidelity noted in the filing. The company also emphasized that U.S. Treasury securities themselves will not be tokenized; instead, blockchain technology will be utilized exclusively for recording share transactions.

Fidelity has consistently positioned itself as a pioneer among traditional financial institutions exploring the crypto landscape. The firm has made notable progress in merging cryptocurrency with traditional financial products, providing clients with diverse investment opportunities. As one of the largest issuers of spot Bitcoin and Ethereum ETFs in the U.S., Fidelity manages $16.5 billion and $780 million in its FBTC and FETH funds, respectively. Recently, the company registered the "Fidelity Solana Fund" in Delaware, highlighting its strategic move into the growing Solana ETF market.

Fidelity's "OnChain" application underscores its determination to tap into the fast-expanding market for tokenized real-world assets (RWAs). The tokenized U.S. Treasury market has experienced significant growth, with total market capitalization reaching $4.77 billion—a nearly 500% increase over the past year, according to rwa.xyz. Of this, $3.32 billion worth of assets are hosted on Ethereum.

BlackRock leads the sector with its tokenized Treasury fund "BUIDL," valued at $1.467 billion. Similarly, Franklin Templeton's on-chain money market fund—the first of its kind—has accumulated $689 million in assets. Fidelity's move with OnChain signals its intent to establish a foothold in this rapidly growing market.