The asset management giant Fidelity Investments is stepping into the rapidly evolving world of tokenized real-world assets (RWAs) with the launch of a new money market fund called OnChain. This fund will invest primarily in U.S. Treasury securities and leverage the Ethereum blockchain to record share issuance and ownership data—marking a pivotal moment in the convergence of traditional finance and decentralized technology.
While the fund does not involve direct investment in cryptocurrencies or digital assets, its use of blockchain for transparent, tamper-resistant recordkeeping signals a growing institutional embrace of distributed ledger technology. As one of the most trusted names in financial services, Fidelity’s move reinforces confidence in blockchain’s role beyond speculation—toward practical, regulated financial infrastructure.
How the OnChain Fund Works
The OnChain fund will comply with Section 2a-7 of the Investment Company Act of 1940, ensuring strict regulatory oversight. It plans to allocate at least 99.5% of its total assets to cash and U.S. Treasury securities, with no less than 80% invested directly in Treasuries. Importantly, this is not a crypto fund—there are no exposures to digital assets such as Bitcoin or Ethereum.
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Instead, the innovation lies in how ownership is tracked. The fund’s transfer agent will maintain the official register of share ownership using traditional book-entry systems, while simultaneously recording a secondary ledger on the Ethereum public blockchain. This dual-record system enhances transparency and auditability without compromising regulatory compliance.
Although the blockchain version does not serve as the legal record of ownership, it will be reconciled daily with the official books. This process ensures that both ledgers reflect the same number of outstanding shares and accurate holder information at any given time—creating a near real-time, verifiable trail of transactions.
Access Requirements: Blockchain Wallets for Institutions
To participate in the OnChain fund, investors must have a blockchain wallet, which will be created and managed by the transfer agent during account setup. While investors gain access to blockchain-based verification of their holdings, control of the wallet remains with the transfer agent. This arrangement allows for error correction and protection against unauthorized transactions on-chain—critical safeguards for institutional-grade operations.
This hybrid model balances innovation with security: institutions benefit from blockchain’s immutability and transparency, while maintaining centralized oversight to meet fiduciary and compliance standards.
The Growing Market for Tokenized U.S. Treasuries
Fidelity’s entry places it alongside other financial titans like BlackRock and Franklin Templeton, all of whom are actively expanding their presence in the RWA space. According to data from rwa.xyz, the total market value of tokenized U.S. Treasuries currently stands at approximately $4.78 billion**, with Ethereum hosting over **$3.3 billion worth—making it the dominant chain for institutional-grade RWA deployments.
BlackRock’s BUIDL fund leads the sector with around $1.5 billion in assets under management**, demonstrating strong demand for yield-bearing, blockchain-tracked instruments. Franklin Templeton has also extended its FOBXX fund onto the Solana network, amassing close to **$700 million in tokenized assets.
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Despite these advances, Fidelity’s approach differs: rather than fully tokenizing fund shares as BUIDL does, OnChain uses blockchain strictly for off-chain accounting purposes. Share transfers and ownership are recorded on Ethereum, but the tokens themselves are not tradable or transferable outside the closed system. This conservative implementation reflects a cautious yet forward-thinking strategy—one designed to test the waters without overextending into unregulated territory.
Regulatory Status and Launch Timeline
The OnChain fund is expected to become effective on May 30, pending final regulatory approval from U.S. authorities. This conditional launch highlights the careful navigation required when integrating emerging technologies into highly regulated financial products.
Regulators remain focused on investor protection, transparency, and systemic risk mitigation—areas where blockchain can offer solutions if implemented responsibly. By anchoring its innovation within existing legal frameworks, Fidelity sets a precedent for compliant experimentation in decentralized finance (DeFi)-adjacent spaces.
Why This Matters for the Future of Finance
Fidelity’s move underscores a broader trend: real-world asset tokenization is no longer theoretical. From government bonds to private credit and real estate, traditional assets are being reimagined through blockchain’s lens—not to replace legacy systems, but to enhance them.
Key benefits include:
- Increased transparency: Immutable records reduce fraud and reconciliation errors.
- Faster settlement: Potential for near-instantaneous clearing and settlement.
- Improved auditability: Regulators and auditors gain real-time access to verified data.
- Operational efficiency: Automation via smart contracts reduces manual processing costs.
As more institutions adopt similar models, we may see a gradual shift toward hybrid financial ecosystems—where blockchains serve as parallel ledgers for verification, while centralized entities retain custody and governance.
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Frequently Asked Questions (FAQ)
What is the OnChain fund by Fidelity?
The OnChain fund is a U.S. Treasury-focused money market fund that uses the Ethereum blockchain to record share issuance and ownership data. It does not invest in cryptocurrencies but leverages blockchain for enhanced transparency and operational efficiency.
Is Fidelity’s OnChain fund a cryptocurrency product?
No. The fund invests exclusively in cash and U.S. Treasury securities. Blockchain technology is used only for recording share data—not for trading or holding digital assets.
Who can invest in the OnChain fund?
The fund is available only to select institutional investors who complete the application process and possess a blockchain wallet managed by the transfer agent.
How does blockchain improve traditional fund management?
Blockchain enables tamper-proof recordkeeping, reduces reconciliation needs, increases auditability, and lays the groundwork for faster settlement—all while maintaining regulatory compliance.
What role does Ethereum play in this initiative?
Ethereum serves as a public, decentralized ledger where secondary records of share ownership and issuance are stored. These records are reconciled daily with official books to ensure accuracy.
When will the OnChain fund launch?
The fund is scheduled to become effective on May 30, 2025, subject to regulatory approval.
This strategic integration of blockchain into mainstream finance marks a significant milestone in the evolution of digital asset infrastructure. As Fidelity joins BlackRock and others in pioneering RWA applications, the line between traditional finance and decentralized systems continues to blur—ushering in a new era of transparent, efficient, and secure financial markets.