Fidelity Investments announced the launch of a new tokenized money market fund on the Ethereum blockchain. The 'OnChain' initiative is aimed at providing greater transparency and a verifiable transaction history for investors.
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 purpose is to offer greater transparency and a verifiable transaction record for investors. Despite this move to blockchain, Fidelity will keep traditional records of share ownership. Shares will be recorded to the blockchain, providing clear visibility of ownership, while official records will stay with Fidelity. Investors will need to hold their shares in a blockchain wallet.
No Tokenization of Underlying Treasuries
Despite using blockchain for recording share transactions, the underlying U.S. Treasury securities will not be tokenized. The fund will invest in cash and U.S. Treasury securities to ensure liquidity and capital preservation, with assets remaining in traditional form.
Blockchain Technology and Operational Efficiency
Fidelity's entry into tokenized financial products aligns with the trend of using blockchain technology to improve operational efficiency, including quicker settlements and enhanced transparency, which can benefit both investors and asset managers.
Fidelity joins other major players in the tokenized securities market, such as BlackRock, reflecting the growing interest from institutional investors in this technology.
