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Asset manager Fidelity Investments is set to officially join the RWA tokenization world as it initially moves to tokenize its US dollar money market fund through an on-chain treasury fund filing.
According to a statement from the US Securities and Exchange Commission (SEC), Fidelity plans to launch a blockchain-based version of its Treasury Digital Fund (FYHXX). The aim is to tap into the explosive tokenized asset market and leverage blockchain for more efficient transfers.
Fund to Take Effect on May 30
Fidelity’s on-chain treasury fund filing that awaits the regulator’s approval is expected to take effect on May 30. It aims to offer investor transparency and verifiable tracking of share transactions. Fidelity currently maintains traditional book-entry records as the official ownership ledger. The company’s statement stated:
“Although the secondary recording of the OnChain class on a blockchain will not represent the official record of ownership, the transfer agent will reconcile the secondary blockchain transactions with the official records of the OnChain class on at least a daily basis.”
The filing for a US on-chain treasury fund comes at a time when banks and asset managers globally have started shifting as they leverage the features of blockchain technology into traditional financial instruments like funds, credit, and government bonds. The transition towards tokenizing real-world assets (RWA) aligns with a growing quest for operational efficiency and 24/7 settlements.
BlackRock Leads the Market
According to market data from RWA. XYZ, the tokenized money market funds, have grown sixfold in a year to 4.8 billion and are currently led by BlackRock’s product. Blackrock (BLK) partnered with asset firm Securitize to launch a tokenized T-bill called BUIDL in March 2024 and is now the market leader with at least $1.5 billion of assets.
Franklin Templeton’s fund, on the other hand, launched the first ever on-chain money market product that has garnered over $689 million in assets since its 2021 debut. The tokenized US Treasury market is worth $4.77 billion, growing almost 500% over the past year.
Ethereum the Natural Default Answer
According to BlackRock’s head of crypto, Robbie Mitchnick, Ethereum remained the “natural default answer” for TradFi firms interested in tokenizing RWAs on-chain. Speaking during the Blockworks York Digital Asset Summit happening in New York last week, Mitchnick said:
“There was no question that the blockchain we would start our tokenization on would be Ethereum, and that’s not just a BlackRock thing, that’s the natural default answer […] clients are making choices that they do value the decentralization, they do value the credibility, and the security and that’s a great advantage that Ethereum continues to have.”
Conclusion
According to market data, Fidelity remains among the largest issuers of spot Bitcoin and Ether ETFs in the US market, with at least its $16.5 billion FBTC and $780 million FETH. With over $5.8 trillion in assets the firm manages, launching a US on-chain treasury fund makes it one of the traditional finance heavyweights in the emerging tokenized US Treasuries space. Only time will tell what impact Fidelity’s investment will make in the asset tokenization space.
Frequently Asked Questions (FAQs)
What is RWA?
Real World Assets, or RWAs, are physical or traditional assets—like real estate, commodities, stocks, or artwork—that exist in the physical world and have been valued for centuries. They serve as the backbone of the global economy.
What is a tokenized RWA?
Tokenized real-world assets (RWAs) refer to blockchain-based digital tokens representing physical and traditional financial assets, such as cash, commodities, equities, bonds, credit, artwork, and intellectual property.
Why are firms increasingly interested in RWA tokenization?
More than a mere technological upgrade, RWA tokenization is a financial revolution. Tokenization is opening new avenues for investors to make smarter investment decisions in this new age.
Appendix: Glossary to Key Terms
Tokenization: The process by which a piece of sensitive data, such as a credit card number, is replaced by a surrogate value known as a token.
Asset manager: A person or company that manages investments on behalf of others, aiming to maximize returns and achieve financial goals for their clients.
Treasury fund: An investment portfolio consisting of direct obligations of the United States Treasury Department and repurchase agreements in respect of those obligations, including any such investment portfolio maintained by the Trustee or the Bank.
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