Fidelity Investments, one of the world's largest asset managers, has announced the launch of a tokenized Treasury fund on the Ethereum blockchain. This move aims to enhance transparency and incorporate more efficient financial technologies.
The OnChain Share Class
The OnChain share class is an Ethereum-based blockchain share class for Fidelity’s Treasury money market fund. It provides greater transparency of transactions for investors. Although blockchain will play a role in recording transactions, traditional records remain the official ledger. The fund will use nightly reconciled blockchain records, which, while not official, complement traditional finance.
No Tokenization of Underlying Treasuries
While blockchain will be used for share recording, the underlying U.S. Treasury securities in the fund will not be tokenized. The fund primarily invests in cash and U.S. Treasury securities, ensuring capital preservation and liquidity for its investors. 99.5% of its assets remain in traditional Treasury securities and cash.
Blockchain Technology and Operational Efficiency
Fidelity's use of blockchain in financial products supports a trend towards enhanced operational efficiency. Blockchain offers around-the-clock settlement capabilities and improved transparency, beneficial for both investors and asset managers. Many asset managers are actively exploring such technologies to increase operational efficiency.
Fidelity, along with major players like BlackRock and Franklin Templeton, is actively exploring blockchain and tokenization opportunities. This direction attracts increasing attention from institutional investors and may lead to broader adoption in the financial industry.
