Fidelity Investments, a leading asset manager, has registered a new tokenized fund on the Ethereum blockchain, called 'OnChain'. This move aims to enhance transparency and record-keeping efficiency.
What is the OnChain Share Class?
The OnChain share class is a new Ethereum-based blockchain share class for Fidelity's Treasury money market fund. The initiative aims to provide transparency and a verifiable transaction history. While blockchain plays a significant role in recording transactions, Fidelity will continue to maintain traditional book-entry records as the official ownership ledger.
No Tokenization of Underlying Treasuries
While blockchain technology will be used at the share-recording level, the underlying U.S. Treasury securities will not be tokenized. The fund will primarily invest in cash and U.S. Treasury securities, ensuring capital preservation and liquidity for its investors. The use of blockchain is strictly limited to the recording of shares, with the fund's assets remaining in traditional Treasury securities.
Blockchain Technology and Operational Efficiency
The introduction of blockchain in financial products reflects a growing trend towards improving operational efficiency. Blockchain offers potential for around-the-clock settlements and increased transparency, benefiting both investors and asset managers. It also streamlines share transfer processes. Fidelity hopes that blockchain-based funds will become more prevalent, offering a faster, more efficient way to manage and record transactions.
Fidelity's move towards blockchain technology in asset management seeks to enhance transparency and efficiency. This aligns with the broader trend towards tokenizing treasury products, attracting institutional investors' interest.
