Fidelity Investments is launching its first stablecoin, the Fidelity Digital Dollar (FIDD), in early February, marking a major move 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 tradable 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 to expand the utility of blockchain-based financial products.
“This is really just the next step in the evolution of our digital assets 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 with what our customers are asking for, particularly around 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, enabling wider use on 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 bills, consistent with the requirements outlined in the recently passed GENIUS Act, a federal law that establishes clear standards for payment stablecoins.
The GENIUS Act was a key part of the launch, O’Reilly said. “This gives a clear regulatory framework for what reserves should look like and how they should be managed. It’s good for the industry and it’s the right time for us to bring a product to market.”
Coin issuance and reserve values will be disclosed daily on the Fidelity website, and the company will also regularly publish third-party attestations verifying the reserves. Fidelity will manage the coin’s reserves through its in-house investment advisor, Fidelity Management & Research.
FIDD will initially launch on Ethereum, but Fidelity said it may consider 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. who together dominate a market now worth more than $308 billion. T
Ether unveiled its entry into the US market on Tuesday with the launch of USAT, a dollar-backed token.
O’Reilly said the new stablecoin also allows Fidelity to support a wider range of on-chain products down the line. “Having a stablecoin within our ecosystem opens the door to building other on-chain financial services, by us and others. It becomes a building block for more efficient infrastructure,” he said.
The launch adds to Fidelity’s growing list of digital asset offerings, which include crypto custody, trading, a retail-facing Fidelity Crypto app, and a crypto IRA product introduced last year.
Read more: Wall Street Integration Will Fuel Next Phase of Crypto, Says Fidelity Digital Assets
