Fidelity Investments, one of the world's largest asset managers, has announced the launch of a new Ethereum-based tokenized fund aimed at improving transparency and operational efficiency.
What is the OnChain Share Class?
The OnChain share class is an Ethereum-based blockchain share class for Fidelity’s Treasury money market fund. The initiative aims to provide investors with greater transparency and a verifiable track record of share transactions. While blockchain will play a significant role in recording transactions, Fidelity will maintain traditional book-entry records. Investors will be required to hold their shares in a blockchain wallet.
No Tokenization of Underlying Treasuries
Blockchain technology will be used solely for share-recording purposes; the U.S. Treasury securities themselves will not be tokenized. The fund will invest in cash and U.S. Treasury securities, ensuring capital preservation and liquidity. 99.5% of the fund's assets will consist of U.S. Treasury securities and cash, with interest payable upon maturity.
Blockchain Technology and Operational Efficiency
The introduction of tokenized financial products highlights a growing interest among asset managers in using blockchain to enhance operational efficiency. Blockchain offers potential for around-the-clock settlements and increased transparency, benefiting both investors and asset managers. Operational benefits include streamlined share transfer processes.
Fidelity's move into share tokenization aligns it with companies like BlackRock, demonstrating growing interest in tokenization among institutional investors.
