Fidelity Investments has been testing a stablecoin but does not have any plan to launch its U.S. dollar-backed stablecoin.
The asset could allegedly be integrated into the firm's blockchain-based version of its U.S. dollar money market fund, according to a report.
Fidelity filed last week to register an "OnChain" share class for its Treasury Digital Fund (FYHXX), which invests in cash and U.S. Treasury securities. The fund is now open to institutional and hedge fund clients only.
If Fidelity launches a stablecoin, it could act as a settlement layer for tokenized Treasury-related transactions.
Fidelity’s moves are part of a wider trend of traditional finance experimenting with blockchain infrastructure. Interest in the tokenized government bond market has developed, but the stablecoin sector remains highly competitive.
"[This move shows] an increasing validation from world-leading brands that stablecoins are carving the path for the mainstream financial industry to access crypto assets and tokenized real-world assets." said Arnoud Star Busman, CEO at Quantoz Payments, a Netherlands-based stablecoin firm.
Hinting at Fidelity testing a stablecoin Busman said, "Regulation is the great unlock – in the U.S. through the GENIUS act, in Europe through MiCAR. We expect this industry to explode in the next year and forever change the nature of capital markets, securities, banking and payments. The rush is on, and fierce competition will bring both new optionality and consolidation in 2025.”
The lion's share of the market is currently taken by Tether's USDT and Circle's USDC. A recent report indicates that USDC and USDT remain the primary assets in the cryptocurrency area and account for nearly 90% of the segment.
The stablecoin development comes after two announcements from Fidelity on March 25. The firm first bought $60 million in Bitcoin through its FBTC ETF. Arkham Intelligence, a blockchain analytics company that monitors on-chain activity, flagged the transaction. Further, Chicago Board Options Exchange (CBOE) applied for a spot in Solana ETF on behalf of Fidelity Investments at recent.