- Fidelity will launch an Ethereum-based OnChain share class to track Treasury fund transactions with blockchain technology.
- The OnChain shares will provide transparency but traditional records will remain the official ownership ledger.
- The tokenized U.S. Treasuries market is valued at $4.77 billion with Ethereum holding $3.3 billion of these assets.
Fidelity Investments has introduced an Ethereum-based blockchain share class called 'OnChain' for its Treasury money market fund. The initiative, disclosed in a recent regulatory filing with the U.S. Securities and Exchange Commission (SEC), marks a step toward integrating blockchain technology into traditional finance.
Ethereum to Host Fidelity's OnChain Share Class
The asset management firm, which oversees approximately $5.9 trillion, will issue shares of its Fidelity Treasury Digital Fund (FYHXX) on the Ethereum blockchain. The OnChain share class aims to enhance transparency and verifiable tracking of share transactions. Despite the blockchain integration, Fidelity will continue using traditional book-entry records as the official ownership ledger.
Blockchain Integration Without Tokenization
According to the filing, the fund's transfer agent will maintain the official record of ownership, while the secondary blockchain record will serve as an additional tracking method. Daily reconciliations between blockchain transactions and official records will ensure accuracy.
However, the underlying U.S. Treasury securities will not be tokenized. Instead, blockchain technology will be applied solely at the share-recording level.
Growing Market for Tokenized Assets
The fund channels its investments primarily into cash and U.S. Treasury securities. This fund operates according to money market regulations for income generation and ensures fund liquidity. The initiative aligns Fidelity with other major asset managers exploring tokenized real-world assets (RWAs).
Data from rwa.xyz shows that the market for tokenized U.S. Treasuries is valued at approximately $4.77 billion. Ethereum accounts for $3.3 billion of these assets. BlackRock’s tokenized T-bill fund, BUIDL, leads the sector with about $1.5 billion in assets. Franklin Templeton’s FOBXX fund, which recently expanded to Solana, holds around $689 million.
Future Expansion and Institutional Interest
Pending regulatory approval, Fidelity’s blockchain-integrated fund shares are set to become effective on May 30. The move highlights the increasing adoption of blockchain solutions among institutional investors.
Fidelity has also registered a statutory trust named "Fidelity Solana Fund" in Delaware. This development suggests that the firm may be considering a Solana-based ETF. The asset manager has signaled potential future expansion of OnChain to other blockchain networks.