Fidelity Moves to Launch Tokenized US Dollar Fund on Ethereum

Highlights:

• Fidelity has filed with the US SEC to launch a tokenized version of its US dollar money market fund on Ethereum.
• The asset management firm called the new fund Fidelity Treasury Digital Fund (FYHXX)” or “OnChain.“
• OnChain will allow investors to access transparent and verifiable transaction tracking options.

A March 21 filing has revealed that crypto asset management firm Fidelity has sought the US Securities and Exchange Commission (SEC) approval to launch a tokenized version of its US dollar money market fund on Ethereum.

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The new fund, dubbed “Fidelity Treasury Digital Fund (FYHXX)” or “OnChain,” aims to deliver high current income alongside liquidity and capital preservation. While Fidelity must wait for the SEC’s approval, the asset manager plans to roll out its newly proposed fund on March 30, 2025.

The OnChain share class will allow investors to access transparent and verifiable transaction tracking. Fidelity will maintain conventional book-entry registers as the official ownership ledger. It added that there would be no direct tokenization of the US Treasury bills.

🚨BREAKING:

FIDELITY’S DIGITAL US DOLLAR GOES LIVE ON 30 MAY ON ETHEREUM

FIDELITY MANAGES $5.8 TRILLION IN ASSETS

SEND $ETH TO $10K ALREADY 🚀 pic.twitter.com/IAE5mIqQEH

— CryptoGoos (@crypto_goos) March 23, 2025

Important Details About Fidelity’s Proposed Fund

According to the filing, Fidelity Management & Research Company LLC (FMR) will serve as the fund’s adviser and manager. The SEC document also revealed that 99.5% of the fund’s investments will target cash and US Treasury Securities.

Fidelity described Treasury Securities as high-quality securities issued by the US Treasury. These securities are backed by the full faith and backing of the US Treasury. The SEC document also stated that these securities pay floating, variable, or fixed interest rates. In addition, they repay every amount borrowed upon maturity.

The fund shareholders will face annual operating expenses capped at 0.2% post-reimbursement. Institutional investors will access shares upon application. Fidelity set the initial investment for institutional clients at $1 million. Meanwhile, shares will be priced at net asset value per share (NAV). They will trade during the New York Stock Exchange (NYSE) operating hours via Fidelity’s platform.

Aside from operating expenses, shareholders may face tax liabilities. The asset management firm stated that distributions from funds are subject to federal income tax as ordinary income or capital gains. The asset management firm also noted that the fund’s distributions could be subject to state or local taxes. It added that investing through a tax-advantaged retirement account will not incur tax. However, withdrawal from such an account could give rise to future tax obligations.

Fidelity just filed with the SEC to roll out a tokenized dollar fund on Ethereum. The launch date? May 30th. If regulators approve it, the fund will be one of the first on-chain money market funds from a traditional asset manager of this size.

So should we now expect #ETH to… pic.twitter.com/noSoHvV4jA

— Mayank Kharayat (@CryptokaGyan) March 24, 2025

Role of the Ethereum Blockchain in Fidelity’s Proposed Fund

The Ethereum blockchain will track share ownership digitally, with daily reconciliation by the transfer agent. Transfer agents will create and manage wallets, with private keys stored centrally. Fidelity said the blockchain integration will boost the fund’s transparency through public transaction histories.

While Ethereum will play a crucial role in Fidelity’s proposed funds, experts have raised concerns about the blockchain security risks, which could result in financial losses. Other risks associated with the fund include rising interest rates, which could trigger declines in money market security valuations. Low or negative interest rates could adversely impact income yields. In addition, a drop in an issuer’s credit quality can depreciate the value of a money market security.

Ethereum Record Slight Price Surge

At the time of writing, Ethereum is up 3.3% in the last 24 hours, trading at approximately $2,070. Within the same timeframe, ETH’s price extremes oscillated between $1,981.37 and $2,071.86. Ethereum’s market capitalization also increased slightly to about $249.7 billion. Its 24-hour trading volume spiked 56.96% to approximately $10.47 billion.

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