Fidelity Eyes Stablecoins, Tokenised Treasuries in Crypto Push

Multinational financial services provider Fidelity Investments has been playing an important role in the crypto-sphere. The worldwide operating firm with a 2023 revenue of US$28.2 billion (AU$42.8 bn) and assets under management (AUM) of US$4.9 trillion (AU$7.42 tn) has even been trying out Bitcoin mining as early as 2014.

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The granddaughter of Fidelity founder Edward Johnson II, Abigail Johnson, Chairwoman, CEO and President of Fidelity Investments said back in 2017 that her company had realised blockchain’s disruptive potential.

We at Fidelity can see that the evolution of technology is setting our industry up for disruption.

Abigail Johnson, Chairwoman, CEO and President of Fidelity Investments

This remains an interesting statement, though some industry heavyweights still do not support it. Now, Fidelity appears to be increasing its reach into crypto, as several interesting statements reveal.  

Speaking to The Block, Cynthia Lo Bessette, head of the firm’s digital asset management division said while Fidelity is quite pleased with how their two crypto funds have been doing so far, they’re not yet convinced about exchange-traded funds (ETFs) tracking anything but Bitcoin and Ethereum:  

It’s not clear at this point that there is an obvious next ETP following Bitcoin and Ethereum.

Cynthia Lo Bessette, Head of Fidelity’s digital asset management division

ETH Staking Possibility Pending SEC Approval

Just days ago, we reported that BlackRock and Fidelity, the two largest Bitcoin ETF managers hold a combined 2.5% of total BTC supply. On the most recent trading day, Fidelity’s FBTC managed to rake in US$22.6 million (AU$34.3 million) in their fund, while BlackRock’s IBIT saw US$34.6 million (AU$52.5 million) in inflows on the same day.

Lo Bessette told The Block that while the US Securities and Exchange Commission (SEC) has not yet approved a fund with ETH staking she didn’t rule out this could happen later on, adding that Fidelity is in “constructive conversations” with the regulator.

It’s a critical component of the Ethereum investment opportunity. Whether that happens over whatever time period, [I] think it’s more a matter of when it happens and not necessarily if.

Cynthia Lo Bessette, head of Fidelity’s digital asset management division

Stablecoins, Tokenisation Next, Says Lo Bessette

Unsurprisingly, Fidelity has plans to foray into tokenisation, which many major asset managers and financial firms do nowadays. For Lo Bessette it’s all about customer demand though, with the firm thoroughly checking what makes sense to be on chain and what doesn’t really.

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Lo Bessette hinted that stablecoins are what Fidelity is eyeing right now, potentially launching their own down the track. But she said stablecoins and tokenisation are certainly a good match.

We think stablecoins, from the standpoint of representing tokenized cash, are certainly an obvious use case. The next evolution post-stablecoins is tokenized Treasury products. Post that, we’ve seen a lot of interesting project work in the credit and structured product space that we’re also researching.

Cynthia Lo Bessette, Head of Fidelity’s digital asset management division

Earlier in June, Fidelity tokenised one of its money market funds on JP Morgan’s Onyx Digital Assets platform, an Ethereum-based blockchain network. This allows investors to use their fund assets as collateral instantly, enhancing efficiency, reducing transaction costs, and lowering operational risk.