Fidelity Investments is allegedly exploring its own stablecoin to be used for a money market fund on the blockchain.
This brings the firm deeper into the digital assets category and follows news of its application for a tokenized product on the Ethereum network.
Fidelity’s Stablecoin Testing
Notably, Fidelity Investments has started to test its stablecoin and plans to use it in a money market fund in tokenized form.
According to a recent report by The Financial Times, the Ethereum blockchain-based fund will give exposure to U.S. dollars and Treasuries.
The stablecoin will serve as digital cash within the fund that can be used to efficiently transact within the blockchain ecosystem.
Consequently, Fidelity’s move marks a big push into blockchain, particularly for the burgeoning market of tokenized assets.
This latest move follows Fidelity’s steps in the past to offer digital products, consistent with the firm’s general strategy around bringing blockchain technology into its traditional finance services.
Alignment with U.S. Regulatory Developments
As Fidelity ventures into stablecoin testing, U.S. regulators are moving ahead with plans to establish clearer guidelines for the market.
A bipartisan Senate proposal to regulate national stablecoin laws under the GENIUS Act has already received bipartisan support and hopeful final frameworks by the end of Q2 2025 are in the chamber.
With regulations still changing, Fidelity is preparing itself to comply with future legal requirements.
Such regulations could offer more stability and oversight in the market for the stablecoin Fidelity would potentially be issuing.
Growing regulatory interest in stablecoin has made other digital assets companies consider revising what they offer in order to be in position to meet possible future standards.
Fidelity’s Tokenized Money Market Fund
More so, Fidelity’s new tokenized money market fund hopes to transform current investment strategies to a blockchain version of its Treasury Digital Fund.
Investors would be able to gain exposure to U.S. Treasuries and dollars, with the added benefits of blockchain’s transparency and efficiency.
This could change how investors interact with these products as this fund would have more instantaneous transactions compared to traditional money market funds.
Additionally, by integrating Fidelity’s stablecoin into this fund, it adds another layer of functionality.
The fund will utilize it as the “digital cash” that is transferable quickly and securely.
The move by Fidelity mirrors actions taken by other traditional finance companies, including BlackRock and Franklin Templeton, that have also launched tokenized money market funds, managing a combined $2 billion.
The Growing Role of Stablecoins
Meanwhile, Fidelity’s entry into the stablecoin market is part of a broader blockchain adoption trend of traditional finance firms.
As per data from RWA.xyz, the tokenized stablecoin market is already above $5 billion in total assets.
Fidelity’s stablecoin could challenge the current players in the market. So far, Tether and Circle have been the dominant players in the U.S dollar-pegged stablecoin sector.
With demand growing, institutions are exploring how to harness the benefits of blockchain without skipping the hoops of regulatory frameworks.
Future development of stablecoin regulations in the U.S. will be important for that space.
Fidelity’s involvement in this space speaks to its dedication to providing innovative financial products.
