Fidelity Labs to Launch a Blockchain-Based Tokenized U.S. Dollar Money Market Fund

Fidelity has submitted a filing to the U.S. Securities and Exchange Commission (SEC) to register a blockchain-based tokenized U.S. dollar money market fund.

Financial giant Fidelity is making a move into the world of crypto with a new filing to the U.S. Securities and Exchange Commission (SEC).

The filing, spotted on Monday, concerns an initiative to register a blockchain-based tokenized U.S. dollar money market fund.

This product, which is still pending regulatory approval, aims to merge blockchain technology with Fidelity’s conventional financial operations.

The filing pertains to an initiative by Fidelity Investments to introduce a new variant of its existing Fidelity Treasury Digital Fund (FYHXX).

The fund, which debuted last year, operates by holding cash and U.S. Treasury securities, as explained in the filing.

The company's proposal focuses on utilizing blockchain technology for the transfer agent function, which is used to track ownership records.

While the primary, official ownership records would still be kept in paper form as required by regulations, a copy of the ownership chain would be stored on the Ethereum blockchain, according to the filing.

The transfer agent operated by Fidelity would then daily reconcile the transactions on the blockchain with the official records, the filing adds.

This system would not only leverage the security advantages of blockchain but also enable operational efficiency and integration with existing regulatory frameworks.

The financial company, which manages $5.8 trillion in assets, is placing a strong emphasis on compliance in its filing.

The company's initiative to create “OnChain” shares for its Fidelity Treasury Digital Fund (FYHXX) is still pending approval from the SEC.

If approved, the product would be able to begin operation on May 30.

The filing also mentions that the fund's foundation on the Ethereum blockchain leaves room for potential expansion to other blockchains.

The company's decision to apply for approval to list a money market fund on the blockchain comes as institutions are increasingly showing interest in cryptocurrency.