Fidelity Investments, one of the largest asset managers globally, has filed to register a tokenized money market fund using Ethereum blockchain.
What is the OnChain Share Class?
The OnChain share class is an Ethereum-based blockchain share class for Fidelity’s Treasury money market fund, aimed at providing greater transparency and verifiable transaction records for investors. The blockchain will significantly record transactions, but Fidelity will maintain traditional book-entry records as the official ledger. Fidelity will reconcile blockchain transactions with its transfer agent's records daily. Investors must hold shares in a blockchain wallet.
No Tokenization of Underlying Treasuries
While blockchain technology will be used to record shares, the underlying U.S. Treasury securities remain non-tokenized. The fund will primarily invest in cash and U.S. Treasury securities, ensuring capital preservation and liquidity. 99.5% of the assets are in Treasury securities and cash, with interest payable upon maturity. The remaining 0.5% might go to other investments.
Blockchain Technology and Operational Efficiency
Fidelity's step into tokenized financial products marks a wider trend of using blockchain by asset managers and banks for improved operational efficiency. Tokenization will streamline share transfer processes, signaling a move towards faster, more efficient financial transaction management.
Fidelity's entry into the tokenized fund market underscores the importance of blockchain technology in asset management and aligns with a global shift towards the digitalization of financial products.
