Fidelity is launching a stablecoin reserve fund under the framework of the GENIUS Act
Fidelity Investments has launched a money market fund aimed at stablecoin issuers and institutional investors seeking to meet the requirements set out under the GENIUS Act.
Summary
- Fidelity has launched a money market fund designed to help stablecoin issuers meet the requirements set out under the GENIUS Act.
- The new Fidelity Reserves Digital Fund will invest in cash, short-term US Treasuries, and other eligible assets permitted under federal stablecoin regulations.
- Fidelity joins State Street in targeting the stablecoin management market as institutions prepare for the expected growth in digital dollar issuance.
Fidelity said Thursday that the new Fidelity Reserves Digital Fund will invest in cash, short-term US Treasury securities, overnight repurchase agreements backed by Treasuries, and federal money market funds that qualify under the federal stablecoin framework.
The launch places Fidelity among a growing group of traditional financial companies offering products designed for stablecoin reserve management. State Street launched a similar product this week with its State Street Stablecoin Reserves Money Market fund, built with issuers operating under the GENIUS Act.
Robin Foley, Fidelity’s head of fixed income, said the company’s experience in fixed income and capital markets positions it to provide a consistent solution for managing stablecoin issuers under the new law.
Fidelity expands stablecoin strategy
The new fund adds to Fidelity’s stablecoin business, which grew earlier this year with the launch of the Fidelity Digital Dollar, or FIDD.
At the time, Fidelity Digital Assets said that the US dollar-backed stablecoin would serve both retail and institutional investors and would be supported by Fidelity’s management infrastructure. Mike O’Reilly, president of Fidelity Digital Assets, said the company has spent years researching stablecoins and sees regulatory clarification as an important step forward.
The GENIUS Act established the first government-sponsored payment system for stablecoins in the United States. Among its requirements, issuers must maintain reserves, short-term Treasury securities, and certain government money market funds.
Fidelity said the Fidelity Reserves Digital Fund will hold Treasury bills, notes, and bonds with maturities of 93 days or less. The portfolio will also include cash balances and overnight repurchase agreements secured by Treasury securities.
Asset managers aim to market stablecoin reserves
Asset managers have started to introduce products that comply with the standards established under the new law.
State Street said this week that its final fund is designed to help issuers meet the requirements of the GENIUS Act. State Street Bank and Trust Company and Anchorage Digital joined the launch as early backers.
State Street CEO Yie-Hsin Hung said the law established a framework for how stablecoins can be invested. CEO of Anchorage Digital, Nathan McCauley, said that the management of storage facilities will become more important as the use of stablecoins increases.
Industry estimates cited by State Street estimate that global stablecoin issuance could reach between $1.9 trillion and $4 trillion by 2030. If those predictions come true, issuers will need to put the largest amount of reserve assets into the most liquid investments allowed under the law.
Stablecoins, which are usually settled in the US dollar, are currently worth about 320 billion in market value and are widely used for trade, payments, and cross-border transfers.
