Fidelity Investments, one of the world's largest asset managers, engages in an innovative project leveraging blockchain technology for its money market fund.
What is the OnChain Share Class?
The OnChain share class is a new blockchain-based share class for Fidelity's Treasury money market fund, based on the Ethereum blockchain. This initiative aims to provide greater transparency and a verifiable track record for investors. While the blockchain will play a significant role in transaction recording, traditional book-entry records will be maintained as official. Tokenized shares will be stored in blockchain wallets, with the potential for a secondary market yet to be confirmed.
No Tokenization of Underlying Treasuries
While blockchain technology is leveraged for share recording, the underlying U.S. Treasury assets will not be tokenized. The fund primarily invests in cash and U.S. Treasury securities, ensuring capital preservation and liquidity. Thus, the fund retains traditional assets in their current form, maintaining high security levels.
Blockchain Technology and Operational Efficiency
Fidelity's use of blockchain in financial products highlights a trend among asset managers to improve operational efficiency. Blockchain offers around-the-clock settlements and improved transparency, benefiting both investors and asset managers. In the future, blockchain funds may become more prevalent, offering a new way to manage and record transactions.
Fidelity's move into blockchain and tokenization helps the company remain at the forefront of asset management, enhancing transparency and operational efficiency.
