Fidelity Investments, one of the world's largest asset managers, has announced the registration of a tokenized US dollar money market fund on the Ethereum blockchain. The new initiative, called 'OnChain', aims to increase transparency and provide a verifiable record of share transactions for investors.
OnChain: The New Ethereum-Based Share Class
The OnChain share class will be recorded on the Ethereum blockchain, offering investors greater transparency and a verifiable record of transactions. The filing with the U.S. Securities and Exchange Commission (SEC) highlights that while blockchain will play a significant role in recording transactions, Fidelity will maintain traditional book-entry records as the official ownership ledger. Investors will be required to hold their shares in a blockchain wallet.
No Tokenization of Underlying Treasuries
It's important to note that the underlying U.S. Treasury securities in the fund will not be tokenized. The fund will primarily invest in cash and U.S. Treasury securities. The use of blockchain is strictly limited to the recording of shares, and the fund’s assets will remain in traditional Treasury securities.
Blockchain Technology and Operational Efficiency
Fidelity highlights the trend among asset managers and global banks to use blockchain technology to enhance operational efficiency. The tokenization of the fund will also bring operational benefits such as streamlining the share transfer process. In the long run, Fidelity hopes that blockchain-based funds will become more prevalent.
Fidelity's move towards tokenization and blockchain utilization demonstrates its adaptation to new technologies in the financial sector, highlighting the growing interest of institutional investors in these innovations.
