Fidelity plans to launch stablecoin in digital assets push

Fidelity Investments is preparing to introduce its own stablecoin, further expanding the $5 trillion asset manager’s presence in digital assets as the U.S. moves closer to establishing its first regulatory framework for cryptocurrencies.

The Boston-based firm is in the final stages of testing the token, which is intended to function as a cash equivalent in crypto markets and will be overseen by its digital assets division, according to two sources familiar with the plans.

Fidelity’s planned launch aligns with its broader push into the emerging market for tokenized U.S. Treasuries, having been active in digital assets for over a decade. Just last week, the company filed to introduce a digital version of a U.S. money market fund by the end of May, putting it in direct competition with traditional asset management giants BlackRock and Franklin Templeton.

The move comes as Washington undertakes a major overhaul of cryptocurrency oversight following Donald Trump’s election as president.

Trump’s stance on crypto marks a stark departure from the Biden administration’s more cautious approach. He has pledged to foster the development of “lawful and legitimate” dollar-backed stablecoins to bolster the U.S. currency and has called for related legislation to be ready for his signature by August.

Lawmakers in Washington are debating competing proposals to regulate stablecoins, which are designed to maintain a fixed value per coin and serve as a cash-like reserve outside traditional banking institutions.

Most stablecoins are pegged to the U.S. dollar and backed one-to-one by reserves in U.S. Treasuries, with issuers managing the associated risks and keeping the interest earned on those bonds. Currently, approximately $234 billion worth of stablecoins are in circulation globally, with the majority issued offshore by Tether, which is based in El Salvador.

Critics argue that stablecoins pose potential risks to financial stability and could be exploited for consumer fraud.

Investment firms and crypto-focused companies such as Ondo Finance and Hashnote—owned by stablecoin issuer Circle—have been experimenting with security-like tokens that generate interest and serve as instant collateral for trading. These tokenized money market funds have already attracted more than $5 billion, according to data from RWA.xyz.

Supporters view tokenized money market funds as regulated, domestic alternatives to stablecoins. However, skeptics point out that these funds currently lack the deep, liquid secondary markets that stablecoins typically enjoy.

According to Cynthia Lo Bessette, Fidelity Investments’ head of digital asset management, tokenization has the potential to revolutionize the financial services industry.

One key application, she noted, is using tokenized assets as collateral to streamline capital markets and meet margin requirements in trading.

Separately, on Tuesday, World Liberty Financial—the crypto venture backed by Trump and his sons—announced plans to launch its own stablecoin. The token’s reserves will be backed by short-term U.S. Treasuries and other cash-equivalent assets. World Liberty was co-founded by the son of Steve Witkoff, Trump’s former Middle East envoy.