Fidelity to Convert Digital Treasury Fund Into Blockchain-Based Tokens

A major financial firm, Fidelity Investments with $5.8 trillion, is stepping into the world of Blockchain and digital assets. The company has submitted its plans to the U.S. Securities and Exchange Commission (SEC) for creating a tokenized version of its U.S. Treasury Digital Fund (FYHXX) with the help of the popular Blockchain, Ethereum. The fund, which holds around $80 million in U.S. Treasury bills, will make use of Blockchain technology to make transactions more transparent and efficient.

The tokenization of traditional financial assets, like the U.S. Treasury bills, is becoming more popular amongst big financial firms. Companies such as BlackRock and Franklin Templeton have already started to take action in the tokenized Treasuries market. This indicates that the financial industry is increasingly depending on Blockchain technology to make transactions fast, efficient, and cheaper.

Fidelity Filing With SEC

As of March 21, 2025, Fidelity officially submitted a proposal to the US Securities and Exchange Commission. This proposal aimed to launch an “OnChain” share class for its Fidelity Digital Treasury Fund (FYHXX). Doing so, Fidelity will now assist in recording the portion of the fund’s ownership on the Ethereum blockchain to address transparency and security over the network.

However, along with blockchain integration, the traditional method used for recording ownership through book-entry records will still remain the official system. The proposal highlights that the blockchain records will only be used as an additional layer of data which Fidelity’s transfer agents will update and reconcile daily.

The FYHXX fund mainly invests in U.S. Treasury bills and cash. With almost 99.5% of funds contributing towards these assets. The proposal further states that Fidelity is not converting these assets into digital tokens but will record the ownership of the fund on the blockchain network. This means the fund itself will work the same way as before. The difference is that blockchain will only be used to track ownership more securely and efficiently

The Tokenized U.S. Treasury Market: A Growing Trend

The decision of Fidelity to move into tokenization came after the market for tokenized real-world assets (RWAs) was growing quickly. The net worth of the tokenized U.S. Treasury market is around $4.77 billion, which is 500% more than last year. Take the example of BlackRock’s BUIDL tokenized Treasury fund, which launched in March 2024 and has already reached $1.5 billion. Similarly, Franklin Templeton’s Blockchain-based money market fund, which started in 2021, has already grown to $689 million.

In tokenization, traditional financial assets, like government bonds or investment funds are transformed into digital tokens on a Blockchain. With the help of this, transactions are made faster, cheaper, and more efficiently; it also allows you to make payments at any time, even if the banking hours are over.

Many traditional finance firms prefer Ethereum for tokenizing real-world assets ( RWAs); it has more than $3.3 billion in RWAs which are already tokenized on the network. Ethereum has proven itself and is popular for its reliability, transparency, and security qualities, which are important for financial institutions.

Fidelity’s OnChain Class

Fidelity has Filed with the SEC for introducing an Ethereum-based “OnChain” share class for its Fidelity Treasury Digital Fund (FYHXX) Though the main holding of the fund – U.S. Treasury bills -won’t be able to be tokenized directly, the OnChain share class will be tracked on the Blockchain, which would provide improved transparency and accurate tracking of Share transactions. The expected lunch for the OnChain class is on May 30, 2025.

Conclusion

Fidelity is taking major steps towards the future of finance. By tokenizing its Digital Treasury Fund, the company is accepting Blockchain technology and is making way for more efficient, transparent, and secure transactions.

FAQ

When did Fidelity file the proposal?

On March 21, 2025, it filed the proposal

To whom did the fidelity submit the proposal?

It submitted its proposal to the U.S. Securities and Exchange Commission (SEC).

What is the total value of a tokenized fund?

The total value of a tokenized fund is $80 million.

Which blockchain will Fidelity use?

It will use the Ethereum blockchain.

Who else has tokenized treasury funds?

BlackRock and Franklin Templeton have done similar projects.

Glossary

Tokenization- conversion of asset ownership into digital tokens on an Ethereum.

Ethereum – A popular blockchain

OnChain Share Class – A new share class by Fidelity recorded on a blockchain.