Fidelity Enters Onchain Finance With the Launch of Its First Stablecoin

Fidelity Investments is making a big move into onchain finance with its first stablecoin, called the Fidelity digital dollar (FIDD). The launch, planned for early February, shows a stronger push by one of the world’s largest asset managers into digital assets.

With this step, Fidelity is entering a fast-growing market that links traditional finance with crypto.

Fidelity Details How the Digital Dollar Will Work

As officially announced, Fidelity Digital Assets, a federally chartered national bank and a subsidiary of Fidelity Investments, will issue the Fidelity Digital Dollar. The company designed the stablecoin as a 1:1 digital representation of the U.S. dollar. 

Users will be able to redeem each token for one dollar directly on Fidelity’s crypto platforms. This includes Fidelity Digital Assets, Fidelity Crypto, and Fidelity Crypto for Wealth Managers.

Fidelity also plans to list the stablecoin on major crypto exchanges. This will make it easier for both institutions and everyday users to access it and trade it.

Fidelity’s soon-to-launch stablecoin is built on the Ethereum blockchain to allow seamless transfers and broad compatibility. Users can send the  upcoming stablecoin to any Ethereum mainnet address. This makes it easy to use across decentralized finance (DeFi) apps and other blockchain platforms. 

Interestingly, the company built the product to support around-the-clock settlement for institutional traders and fast onchain payments for everyday users. 

Clear Rules Pave the Way for Fidelity’s Stablecoin Launch

The recently signed GENIUS Act helped shape Fidelity’s decision to launch the stablecoin. The law set clear federal rules for stablecoins, including strong requirements for reserves and risk control.

Under these rules, Fidelity will back the stablecoin with cash, similar low-risk assets, and short-term U.S. Treasury bills. Fidelity plans to disclose daily information on the amount of stablecoins issued and the value of reserves on its website. 

The company will publish regular reports from independent firms to show the reserves fully back the stablecoin in circulation. The asset manager said that Fidelity Management and Research will handle the reserves. This helps Fidelity manage risk and stays transparent with users and regulators.

Fidelity to Compete with Established Stablecoin Issuers 

By launching a stablecoin, Fidelity set to compete directly with major crypto companies like Circle and Tether. These firms currently dominate a stablecoin market valued at more than $300 billion. 

At the same time, competition in the United States is growing. Issuers are preparing to take advantage of clearer rules and growing demand from large institutions. Fidelity’s strong brand, regulatory standing, and large client base could help it stand out in a crowded market. 

Meanwhile, the stablecoin launch adds to Fidelity’s growing list of digital asset services. The firm already offers crypto custody and trading services. It also runs a retail crypto app and launched a crypto individual retirement account last year.

Together, these products show a steady push toward making digital assets a core part of Fidelity’s financial offerings.