The US-based financial service corporation, Fidelity Investments, has planned to launch its stablecoin. This step remarks that the firm is pushing itself into digital assets while managing $5 trillion in assets.
The two people who are aware of the firm’s plan stated that the company his in an advance stage of testing its token. The company’s digital assets arm will manage them, positioning them as cryptocurrencies in the market.
As per the reports, this launch is a part of the firm’s expansion in the developing market for tokenized versions of US Treasuries. Late last week, a company filed to launch a digital version of a US money market fund by the end of May, directly competing with traditional asset management rivals like BlackRock and Franklin Templeton.
This move comes as Washington is set to make changes in the regulation of US cryptocurrencies. As during the election, US President Donald Trump has stated that he will create a crypto-friendly approach. Trump has committed to promoting the growth of “lawful and legitimate” dollar-backed stablecoins to support the US currency and has called for legislation to be ready for signing by August.
Debates are ongoing among politicians in Washington regarding competing bills aimed at regulating stablecoins, which are designed to maintain a constant value per coin and provide a cash reserve outside the regulated banking system.
Most stablecoins are pegged to the US dollar and are backed one-to-one by reserves held in US Treasuries. Operators manage associated risks while retaining the interest generated from these bonds.
Currently, there are about $234 billion worth of stablecoins in circulation globally, with the majority issued offshore by Tether, based in El Salvador. Critics have raised concerns about the potential risks stablecoins pose to financial stability and their potential for facilitating consumer fraud.
Various fund groups, along with cryptocurrency firms such as Ondo Finance and Hashnote, owned by stablecoin operator Circle, have been testing security-like tokens that pay interest and serve as immediate collateral for trading. These tokenized money market funds have attracted over $5 billion, according to data provider
Supporters believe that tokenized money market funds, unlike stablecoins, represent regulated, onshore deposits. However, critics argue that existing tokenized funds lack the in-depth, liquid secondary markets that stablecoins typically have.
Cynthia Lo Bessette, head of digital asset management at Fidelity Investments, stated that, “Tokenization could revolutionize the financial services sector. One potential application is using tokenized assets as collateral to fulfill margin requirements in trading.”
Further, World Liberty Financial, a cryptocurrency project endorsed by Trump and his sons, has also announced plans to launch its stablecoin. The reserves for this coin will be backed by short-term US Treasuries and other cash equivalents. World Liberty was co-founded by Steve Witkoff, the son of Trump’s Middle East envoy.