Fidelity Seeks SEC Approval for Blockchain-Powered USD Money Market Fund

Fidelity Investments, an asset management company, has applied to the U.S. Securities and Exchange Commission (SEC) for permission to introduce a share class of its U.S. dollar money market fund that is based on blockchain technology and uses tokens.

Fidelity Investments has proposed to the SEC to establish a blockchain-powered version of its U.S. dollar money market fund. The proposal, which was submitted to the SEC, aims to register an "OnChain" share class for its Fidelity Treasury Digital Fund (FYHXX), which invests in cash and U.S. Treasury securities.

At the moment, the Ethereum (ETH) network is being used for this fund, with the possibility of integrating other blockchains in the future. If authorized, the fund will begin operations on May 30.

Fidelity's submission is part of a larger trend among financial institutions to transfer conventional financial products such as government bonds onto blockchain platforms in order to improve efficiency and expedite transactions. Franklin Templeton was the first to engage in this trend, launching its on-chain money market fund FOBXX in 2021.

Since Franklin Templeton's groundbreaking move, other major financial players, such as JPMorgan and BlackRock, have joined the fray.

In 2023, JPMorgan introduced a fund for tokenized U.S. Treasury bonds, which invests in U.S. Treasury bills, bonds, and notes that are considered debt securities.

In March 2024, BlackRock, in collaboration with the digital asset firm Securitize, introduced a fund for tokenized U.S. Treasury bills called BUIDL, which recently surpassed $1 billion in assets under management.

According to rwa.xyz, tokenized U.S. Treasury debt is now the second-largest contributor to the overall value of tokenized real-world assets, with a market capitalization of $4.80 billion, placing it just behind private credit funds, which hold $12.20 billion.