Fidelity Introduces Ethereum-Based ‘OnChain’ Shares for Money Market Fund

Summary

• Fidelity Introduces Ethereum ‘OnChain’ Shares: The asset management giant is launching an “OnChain” share class for its Treasury money market fund, using the Ethereum blockchain to record transactions, aiming for increased transparency for investors.

• Dual Record System & RWA Trend: While official ownership records will remain traditional, Fidelity will reconcile daily Ethereum blockchain records. This move places Fidelity alongside BlackRock and Franklin Templeton in the growing tokenized real-world asset (RWA) market.

• Potential Solana Expansion: Fidelity’s recent filing for a “Fidelity Solana Fund” hints at a potential expansion into Solana-based products, indicating a broader strategy in blockchain-integrated financial offerings.

Investment management titan Fidelity is breaking new ground by launching an Ethereum-based share category dubbed “OnChain” for its Treasury money market fund.

This innovative move, detailed in a recent filing, signifies Fidelity’s embrace of blockchain technology within traditional finance.

Although official records of ownership will remain with Fidelity via conventional bookkeeping, transactions will also be registered on the Ethereum blockchain, ensuring a dual recording system reconciled daily.

Dual-Layer Record Keeping

Fidelity Investments, a financial powerhouse overseeing roughly $5.9 trillion in assets, has officially announced the creation of an Ethereum blockchain-integrated share class named ‘OnChain’.

This addition will be part of their existing Fidelity Treasury Digital Fund (FYHXX), as outlined in a filing submitted to the U.S. Securities and Exchange Commission (SEC).

The asset management giant intends to record share issuances for this fund directly onto the Ethereum network.

The principal aim of the OnChain share class is to enhance investor transparency by offering a verifiable trail of share transactions.

However, Fidelity will continue to operate traditional book-entry systems as the authoritative record-keeping method.

The regulatory document clarifies, “The transfer agent will maintain the formal registry of share ownership for the OnChain class using established book-entry methods.

Simultaneously, ownership of the OnChain class will be digitized and recorded on a public blockchain.” It further explains, “While this secondary blockchain record will not serve as the primary record of ownership, Fidelity’s transfer agent will perform daily reconciliations of transactions recorded on the blockchain.”

Focus on Transparency and Verifiability for Investors

The core investment strategy of the fund centers around holdings in cash and U.S. Treasury securities, adhering to standard money market fund regulations.

It seeks to generate income while prioritizing capital preservation and liquidity.

Importantly, the filing explicitly states that the underlying Treasury assets themselves will not be transformed into tokens.

Rather, blockchain technology is being applied solely to the recording and tracking of share ownership at the class level.

This pioneering step places Fidelity alongside other major asset managers, including industry leaders such as BlackRock and Franklin Templeton, who are also actively participating in the burgeoning sector of tokenized real-world assets (RWAs).

Data from rwa.xyz indicates the market capitalization for tokenized U.S.

Treasuries Remain Untokenized; Blockchain Applied at Share Level

Treasuries have reached approximately $4.77 billion. Ethereum’s blockchain is particularly dominant within this sector, accounting for $3.3 billion of the total tokenized Treasury value.

Currently, BlackRock’s tokenized T-bill fund, known as BUIDL, leads the market with assets under management of around $1.5 billion.

Franklin Templeton, having recently extended its FOBXX fund to the Solana network, has accumulated approximately $689 million in assets.

Fidelity’s blockchain-enabled fund shares are anticipated to become operational on May 30, contingent upon regulatory clearance.

This initiative underscores a growing trend among institutional investors to incorporate blockchain technology into conventional financial products.

Furthermore, the recent registration of a statutory trust named “Fidelity Solana Fund” in Delaware suggests that the asset manager may also be considering the development of a Solana-based exchange-traded product, indicating a broader strategic interest in blockchain-based financial instruments.

Also Read: Fidelity Investment in Solana Rumors Emerge

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