Fidelity Expands Crypto Strategy with Tokenized Treasury Fund on Ethereum

Fidelity Investments is making a major move into asset tokenization by planning to convert its U.S. dollar money market fund into a blockchain-based version.

In a recent filing with the U.S. Securities and Exchange Commission (SEC), Fidelity announced plans to tokenize its Fidelity Treasury Digital Fund (FYHXX). By using blockchain technology, the company aims to improve transaction efficiency and take advantage of the growing market for tokenized assets.

What is the FYHXX Fund?

The FYHXX fund, launched late last year, holds 80 million dollars in U.S. Treasury bills. Its OnChain class currently operates on the Ethereum network, with plans to expand to other blockchains in the future. The new tokenized version is awaiting regulatory approval and is expected to launch on May 30.

Fidelity’s move reflects a broader trend in the financial industry, where banks and asset managers are increasingly using blockchain to tokenize traditional financial assets such as government bonds, credit, and investment funds. This process, known as real-world asset tokenization, offers several benefits:

• Faster and more efficient transactions
• Lower operational costs
• The ability to settle payments at any time, even outside banking hours

BlackRock, Franklin Templeton, and the Rise of Tokenized Treasuries

Fidelity, which manages 5.8 trillion dollars in assets, is the latest major financial firm to enter the tokenized U.S. Treasuries market. BlackRock partnered with Securitize last March to launch the BUIDL tokenized T-bill fund, which quickly grew to 1.5 billion dollars in assets. Meanwhile, Franklin Templeton’s blockchain-based money market fund, introduced in 2021, has reached 689 million dollars.

Ethereum Leads the Way

Ethereum has become the preferred blockchain for financial institutions looking to tokenize assets, with over 3.3 billion dollars worth of tokenized real-world assets. The Stellar network follows with 465.6 million dollars. BlackRock’s head of crypto, Robbie Mitchnick, recently described Ethereum as the most natural choice for traditional finance firms entering this space.

The tokenized U.S. Treasury market as a whole is now worth 4.77 billion dollars, marking a 500% increase in just one year.

Fidelity’s Expanding Crypto Offerings

Beyond tokenization, Fidelity is also a leading player in cryptocurrency investment products. The company’s spot Bitcoin and Ether ETFs are among the most popular in the U.S.:

• The Fidelity Bitcoin ETF (FBTC) is valued at 16.5 billion dollars
• The Fidelity Ether ETF (FETH) holds 780 million dollars, according to SoSoValue data

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Pro-Crypto Policies Driving Adoption

For years, regulatory uncertainty slowed the growth of tokenized securities, as banks were hesitant to engage with crypto-related assets. However, with Donald Trump’s administration supporting pro-crypto policies, the industry is seeing rapid change. The launch of BlackRock’s BUIDL fund was a turning point, inspiring more companies to enter the space.

The Future of Tokenized Assets

Other major financial players, including Visa, Mastercard, and Tether, are also embracing tokenization:

• Visa has introduced a platform to help banks issue tokenized assets
• Tether has launched its own tokenization platform
• Mastercard is exploring blockchain for business payments

Experts predict that tokenized assets could reach 600 billion dollars by 2030, according to a report from Boston Consulting Group. Meanwhile, the Commodity Futures Trading Commission (CFTC) is evaluating how tokenized assets could be used as collateral in future trades.

Fidelity’s latest move is another sign that blockchain-based finance is becoming a key part of the future of global asset management.