Fidelity Investments will launch its first stablecoin, Fidelity Digital Dollar (FIDD), in early February, marking a major step by one of the largest traditional financial institutions into on-chain finance.
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 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,” Mike O’Reilly, president of Fidelity Digital Assets, said 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 address on the Ethereum mainnet, allowing for broader use in decentralized finance (DeFi) protocols and blockchain-based platforms.
The ‘right time’
The company confirmed that the reserves will consist of cash, cash equivalents, and short-term U.S. Treasury bonds, in line with the requirements set out in the recently passed GENIUS Act, a federal law that established clear standards for payment stablecoins.
The GENIUS Act was a key factor in the launch, O’Reilly said. “It provides a clear regulatory framework for what reserves should look like and how they should be managed. That’s good for the industry and makes it the right time for us to bring a product to market.”
Coin issuance and reserve values will be disclosed daily on Fidelity’s website, and the company will also periodically publish third-party certifications 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 like Circle (USDC) and Tether. which together dominate a market currently valued at more than $308 billion. t
ether revealed on Tuesday that it is moving into the US market with the launch of USAT, a dollar-backed token.
O’Reilly said the new stablecoin also positions Fidelity to support a broader range of on-chain products in the future. “Having a stablecoin within our ecosystem opens the door for us and others to build other financial services on the chain. It becomes a building block for more efficient infrastructure,” he said.
The launch adds to Fidelity’s growing list of digital asset offerings, including crypto custody, trading, a retail-oriented Fidelity Crypto app, and a crypto IRA product introduced last year.
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