Nikolas Sargeant
Fidelity is entering the asset tokenization space by recording investor share data on Ethereum while maintaining traditional custody for its underlying assets and official ownership records.
Traditional Finance Giants Embrace Blockchain Technology
The $5.9 trillion asset management leader filed plans with the SEC on March 21 to create an "OnChain" share class for its $80 million Fidelity Treasury Digital Fund (FYHXX). This marks Fidelity's first significant venture into asset tokenization.
While the fund's core assets—primarily US Treasury bills and cash—will remain in conventional custody, investor share records will also be maintained on the Ethereum blockchain to enhance transparency and traceability. The official ownership ledger will still be kept off-chain by Fidelity's transfer agent, with daily reconciliation between blockchain entries and the official record.
Tokenization Movement Gains Institutional Momentum
Fidelity joins other financial powerhouses like BlackRock and Franklin Templeton exploring tokenization strategies. These institutions view blockchain technology as a path to modernizing financial infrastructure through digital representations of real-world assets (RWAs).
The benefits driving this trend include instantaneous settlement, fractional ownership possibilities, enhanced transparency, and broader access to previously restricted financial products.
Market adoption continues to accelerate, with tokenized US Treasuries reaching $4.78 billion according to rwa.xyz data. Ethereum dominates this space with over $3.3 billion in value, significantly outpacing alternative blockchain platforms like Stellar.
BlackRock's USD Institutional Digital Liquidity Fund (BUIDL), launched just last year, has already accumulated $1.46 billion in tokenized assets, demonstrating that major institutions are actively implementing blockchain solutions rather than merely exploring them.
Fidelity's Strategic Blockchain Implementation
Fidelity's approach balances innovation with prudence. By maintaining the traditional asset structure while adding blockchain record-keeping, the company can test distributed ledger benefits without compromising regulatory compliance or disrupting investor expectations. The fund remains a standard money market vehicle focused on capital preservation, income, and liquidity—now with an optional technological enhancement.
The OnChain share class is projected to launch by May 30, pending regulatory approval. Fidelity has indicated it may explore additional blockchain platforms beyond Ethereum in the future, suggesting broader digital asset ambitions.
