Fidelity files for Ethereum-based US Treasury fund ‘OnChain’

Fidelity Investments has filed to register a tokenized version of its US dollar money market fund on Ethereum — joining the likes of BlackRock and Franklin Templeton in the blockchain tokenization space.

Fidelity’s March 21 filing with the US securities regulator  said  “OnChain” would help track transactions of the Fidelity Treasury Digital Fund (FYHXX) — an $80 million fund  consisting  almost entirely of US Treasury bills.

While OnChain is pending regulatory approval, it is expected to take effect on May 30, Fidelity said.

The OnChain share class aims to provide investors transparency and verifiable tracking of share transactions of FYHXX, although Fidelity will maintain traditional book-entry records as the official ownership ledger.

“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 said the US Treasury bills wouldn’t be directly tokenized.

The $5.8 trillion asset manager said it may also expand OnChain to other blockchains in the future.

Asset managers have increasingly turned to blockchain to tokenize  Treasury bills, bonds and private credit  over the past few years.

The  RWA tokenization market  for Treasury products is currently valued at $4.78 billion, led by the  BlackRock USD Institutional Digital Liquidity Fund  (BUIDL) at $1.46 billion,  according  to rwa.xyz.

Over $3.3 billion worth of RWAs are  tokenized on the Ethereum network,  followed by  Stellar at $465.6 million.

BlackRock’s head of crypto, Robbie Mitchnick, recently  said  Ethereum is still the “natural default answer” for TradFi firms looking to tokenize RWAs onchain.

“There was no question that the blockchain we would start our tokenization on would be Ethereum, and that’s not just a BlackRock thing, that’s the natural default answer.”

“Clients clearly are making choices that they do value the decentralization, they do value the credibility, and the security and that’s a great advantage that Ethereum continues to have,” he said at the  Digital Asset Summit  in New York on March 20.