Fidelity Investments will launch its first stablecoin, the Fidelity Digital Dollar (FIDD), in early February, marking a major move from one of the largest traditional financial institutions into onchain financing.
FIDD will be issued by Fidelity Digital Assets, a federally chartered national bank and subsidiary of Fidelity. The Ethereum-based stablecoin will be redeemable for $1 on Fidelity’s crypto trading platforms – Fidelity Digital Assets, Fidelity Crypto and Fidelity Crypto for Wealth Managers – and will also be made available on major crypto exchanges, according to a press release.
The company says it designed the product to meet growing customer demand and expand the usefulness of blockchain-based financial products.
“This is really just the next step in the evolution of our digital asset platform,” said Mike O’Reilly, president of Fidelity Digital Assets, in an interview. “The ability to offer a fiat-backed stablecoin is a natural fit for what our customers are asking for, especially when it comes to low-cost payments and settlements.”
FIDD is designed for use cases such as 24/7 settlement for institutional traders and on-chain payments for retail users. It can also be transferred to any Ethereum mainnet address, enabling broader use across decentralized finance (DeFi) protocols and blockchain-based platforms.
The ‘right moment’
The company confirmed that the reserves will consist of cash, cash equivalents and short-term U.S. Treasury securities, in accordance with the requirements set forth in the recently passed GENIUS Act, a federal law that set clear standards for payment stable coins.
The GENIUS Act was a major factor in its launch, O’Reilly said. “It provides a clear regulatory framework for what the reserves should look like and how they should be managed. That’s good for the industry and made this the right time for us to bring a product to market.”
Coin issuance and reserve values will be announced daily on Fidelity’s website, and the company will also regularly publish third-party certificates verifying reserves. Fidelity will manage the currency’s reserves through its in-house investment advisor, Fidelity Management & Research.
FIDD will initially launch on Ethereum, but Fidelity said it could explore expanding to additional blockchains or layer 2 networks in the future.
A new competitor
Fidelity’s entry into the stablecoin market puts it in direct competition with crypto-native issuers such as Circle (USDC) and Tether USDT$0.9988which together dominate a market now worth more than $308 billion. T
ether revealed on Tuesday that it is entering the US market with the launch of USAT, a dollar-backed token
O’Reilly said the new stablecoin also positions Fidelity to support a wider range of onchain products in the future. “Having a stablecoin within our ecosystem opens the door for other financial services to be built by us and others in the chain. It becomes a building block for a more efficient infrastructure,” he said.
The launch adds to Fidelity’s growing list of digital asset offerings, including crypto custody, trading, a retail-focused Fidelity Crypto app and a crypto IRA product introduced last year.
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