Fidelity Investments Plans to Issue Stablecoin Amid Growing Crypto Adoption

Fidelity Investments Plans to Issue Stablecoin Following Tokenized Money Market Fund Launch

- Advertisement -
  • Fidelity Investments is reportedly planning to issue its own stablecoin following its recent launch of a tokenized money market fund.
  • This move aligns with the Trump administration’s focus on stablecoins and the CFTC’s initiatives to pilot tokenized assets for margin purposes.
  • Asset managers involved in stablecoins can earn yield on underlying assets rather than holding non-yielding stablecoins to facilitate 24/7 redemptions.

Fidelity Investments is expanding its cryptocurrency strategy beyond its recently announced tokenized money market fund. According to sources cited by the Financial Times, the major asset manager is now planning to launch its own stablecoin, deepening its commitment to blockchain-based financial products.

This dual approach with tokenized funds and stablecoins aligns with recent regulatory developments. The Commodity Futures Trading Commission (CFTC) has been actively piloting the use of tokenized assets, including stablecoins, for margin purposes. In a related development, CME Group announced yesterday it’s testing a solution and plans to involve market participants later in 2024.

The timing coincides with the Trump administration’s cryptocurrency policy focus on stablecoins, with legislation targeted for passage by late April. World Liberty Financial, an organization with Trump associations, announced plans yesterday to issue the USD1 stablecoin. The reserve assets backing this stablecoin might potentially include tokenized Treasury securities.

While asset managers would benefit from participating in the stablecoin market, creating individual stablecoins rather than collaborative ones (similar to M coin or the Global Dollar) presents unique challenges. Traditional asset managers typically allow fund redemptions at scheduled intervals, usually daily for money market funds, which conflicts with cryptocurrency’s 24/7 operational nature.

This creates a technical challenge: asset managers need to facilitate instant switching between tokenized funds and stablecoins. To accomplish this, they must maintain stablecoin reserves for fund redemptions. By issuing their own stablecoins, asset managers like Fidelity can generate yield from the underlying assets rather than holding other stablecoins that provide no return.

Ondo Finance offers an alternative solution by allowing holders of various tokenized funds to sell them to Ondo at any time. In turn, Ondo utilizes these same tokenized funds as reserve assets for its yield-bearing products, creating a more efficient ecosystem for digital asset liquidity.

As major financial institutions continue exploring tokenized assets and stablecoins, these developments represent significant steps toward integrating traditional finance with blockchain technology, potentially addressing long-standing challenges in liquidity management and market accessibility.

✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.

Previous Articles:

- Advertisement -
- Advertisement -
- Advertisement -

Latest

GameStop Eyes $1.3B Bitcoin Buy as Inflation Fears Sink Crypto Market

Bitcoin Price fell to $82,480 after briefly hitting $88,474 earlier in the week, influenced by U.S. inflation data showing PCE increased by 0.4% in...

FTX to Begin Paying Major Creditors at End of May, Court Reveals

FTX plans to start paying major creditors on May 30, 2022, with $11.4 billion in cash ready for distribution.Smaller creditors with claims under $50,000...

Kalshi Sues Nevada, New Jersey Regulators Over Sports Contract Ban

Prediction market Kalshi has filed lawsuits against Nevada and New Jersey gaming regulators over cease and desist orders targeting sports-related contracts.Kalshi argues its contracts...

Dogecoin Mining Surge: From Small Businesses to Nasdaq-Listed Firms

Dogecoin mining has become profitable enough to attract interest from both individual miners and publicly traded companies, with potential earnings of up to $750...

Bitcoin Price Falls Below $80,000 as Inflation Fears and Trump Tariffs Loom

Bitcoin prices have retreated toward $80,000 after briefly approaching $90,000, with inflation concerns and Trump's tariff threats weighing on the market.Crypto trader Arthur Hayes...

UAE Dirham Takes Spotlight as Sonic Labs Drops US Dollar Stablecoin

Sonic Labs has abandoned plans for a USD algorithmic stablecoin, pivoting to a UAE dirham-denominated alternative.The decision follows the UAE's announcement of a digital...

VC: Ether “Died by Its Own Hand” as L2s Drain Value from Network

Ethereum's investment appeal is declining as layer-2 networks drain value from the main blockchain while token creation increases unchecked.The ETH/BTC ratio has fallen to...

Musk Sells X to xAI Amid Fraud Lawsuit, Sparking Investor Controversy

Elon Musk has transferred ownership of X (formerly Twitter) to his AI startup xAI in an all-stock transaction, valuing X at $33 billion and...
- Advertisement -

Must Read

How Cryptocurrency Works For Beginners?

Welcome to the world of cryptocurrency! If you're new to this exciting and rapidly evolving landscape, you might feel like Alice in Wonderland, exploring...

Read Next
Recommended to you