OnChain U.S Treasury Fund Filing: Fidelity Ready To Join Asset Tokenization Race 

Within six years, tokenized money market funds have grown sixfold. Currently, BlackRock products lead the market.  Fidelity Investments. The US-based asset manager has filed to register a blockchain-based tokenized version of its U.S. dollar money market fund on Ethereum. U.S. Securities Exchange Commission (SEC) is seeking to register for an “On Chain” share class on Fidelity Treasury Digital Fund (FYHXX). On March 21. Fidelity confirmed that the “On Chain” will help with the transactions of Fidelity Treasury Digital Fund and they will be using blockchains as transferring agents. The filing confirmed that the OnChian class of the fund uses Ethereum currently, and in the future, this is expected to expand to other blockchains. The registration requires regulatory approval and the product is expected to become effective from May 30. 

The filing was initiated as the assets managers and global bonds increasingly opted for traditional financial instruments including government bonds, funds on blockchain rails, and credit. They often referred to this process as the tokenization of real-world assets (RWAs) and this is implemented to pursue the operational efficiency of the gains around-the-clock settlements. Fidelity manages $5.8 trillion in assets and is the latest traditional financial heavyweight looking out to enter the growing tokenized U.S. Treasuries space. 

Last March, Balckrock (BLK) along with Securitize, a diassetassert firm launched a tokenized T-bill which was named BUIDL. With $1.5 billion of assets, it has gone on to become the market leader. The first on-chain market product, the fund of Franklin Templeton has accumulated over $689 million in assets from its debut in 2021. The current market worth of the complete tokenized US Treasury market is currently worth $4.77 billion. It has grown approximately 500% over the past few years. In the US, Fidelity is one of the largest issuers of spot bitcoin and ether exchange-traded funds (ETF). It has a $16.5 billion FBTC and $780 million FETH. 

Over the past few years, asset managers have successfully transformed blockchain to tokenize treasury bills, private credit, and bonds. While Fidelity manages $5.8 trillion in assets, the project is trying to elevate their game within the tokenized Treasury space. Currently. BlackRock leads this race. BUIDL which was launched in March has joined with Securitize and holds $1.5 billion in assets. They have collected $689 million since 2021. The entire idea is quite simple. They have put the old financial products on a blockchain. This will help with cutting out any middleman, non-stop trading, and faster settlements. FYHXX is currently joining the team, with Ethreumas as their base. Blockchain thus becomes their transfer agent. Fidelity wants the tokenized version of the Real-world assets. 

Tokenization is not a new practice as it has been present for years. Stablecoins acted like dollar stand-ups, other than them most of the tokenized assets never took off. The actual holders which are mostly institutions have approximately 67,530 wallets that have tokenized assets that are not stablecoins. That is about 0.003% of the total asset value of the world. Opimas, the research firm has confirmed that many companies most of the companies working on these projects are on the verge of shutting down. That is how slow things have been.

Tokenized Market And Institution Returns

The US regulatory has been warning banks to maintain their distance from anything related to crypto.  Tokenized securities follow the same rules as traditional securities. However, this can still get lumped in with crypto as it is inherently volatile and risky. As a result of this, huge firms backed off and shifted their focus to AI. But as Donald Trump is back with his pro-crypto stance, the tone has considerably shifted. The whole industry has felt the shift after the BUIDl was launched by BlackRock.

They have provided others to try this out again and Fidelity seeing the positive side has accelerated their plan. It is not only them as Visa has launched a platform for banks to issue the fiat-based tokens in October. Last November, Tether dropped its tokenization platform. As per the reports, Fidelity is deep in crypto as its spot Bitcoin ETF has $16.5 billion and Ether holds approximately $780 million. Crypto analysis opinions that there are a lot of opportunities but it should be accomplished with a lot of work.