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Highlights
- Fidelity Investments has filed paperwork for a blockchain-based money market fund.
- The fund will lean on the Ethereum blockchain with plans for further expansion.
- Institutional interest in tokenization of financial assets have reached a fever pitch.
While BlackRock holds a clear lead over the tokenized money market fund, Fidelity Investments is keen on closing the gap. Fidelity’s latest play is a filing to the US Securities and Exchange Commission (SEC) to tokenize its USD money market fund.
Fidelity Files Paperwork With The SEC For Ethereum-Based Fund Tokenization
According to a filing to the SEC, Fidelity is seeking the registration of a tokenized version of its money market fund. Dubbed the Fidelity Treasury Digital Fund, the firm is eyeing the registration of an Onchain share class for the fund.
Per the filing, the transfer agent will be blockchain technology with the fund name-checking the Ethereum network. Despite leaning on Ethereum, Fidelity’s filing suggests a future expansion to other blockchains in the future.
The filing reveals that the tokenized fund will not invest in any cryptocurrencies but 99.5% will go to US Treasury securities and cash. At the moment, 80% of the fund’s assets are in US Treasury securities with interest payable upon maturity.
The latest filing follows an application to introduce staking in Fidelity’s Ethereum ETF. In Q4 of 2024, Fidelity waded into blockchain-based funds via a filing with the SEC to catch up to BlackRock.
How Will A Blockchain-based Fund Operate?
Details from the SEC filing revealed that the Ethereum blockchain will be used for secondary recording, augmenting the book-entry form. However, investors in the Fund will be required to have a top blockchain wallet to hold the OnChain class shares.
While the filing does not expressly mention a secondary trading market for OnChain class shares, Fidelity hints at the potential peer-to-peer trading of shares on the blockchain.
“The fund has no current agreement to make OnChain class shares available for trading in a secondary market but may enter such an agreement in the future,” read the filing.
Ethereum Price Gains In The Wake Of The Report
The report of Fidelity with its nearly $6 trillion assets under management tapping Ethereum for tokenization has created a stir in the ecosystem. Ethereum’s price climbed by nearly 2% to trade at just above the $2,000 mark.
ETH has its eyes on a key resistance level that could push Ethereum’s price to $1,700 in the coming days. A slew of negative reports have hit Ethereum in recent days with Standard Chartered slashing its ETH prediction for 2025 by 60%
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