Fidelity Set to Launch US Dollar-pegged Stablecoin FIDD

Fidelity Investments has announced plans to launch Fidelity Digital Dollar (FIDD), its own stablecoin pegged to the US Dollar. The asset manager disclosed this in a press release on January 28.

According to the press statement, FIDD will be issued by Fidelity Digital Assets, its national trust bank. It will be available for retail and institutional investors in the coming weeks.

Fidelity FIDD To Launch Ethereum

The announcement comes months, almost a year, after Fidelity first disclosed that it was exploring its own stablecoin. While the exact launch date for the FIDD has not been disclosed, the firm mentioned that it will deploy on the Ethereum network.

This represents a major endorsement for Ethereum, especially as the leading smart contract network. While upstarts such as Solana have also been seeing institutional adoption, Ethereum remains the Wall Street favorite, likely due to its more established capital base and DeFi ecosystem.

By launching on Ethereum, the FIDD stablecoin will be available for use on the network and on all other Ethereum layer-2 networks. Fidelity itself acknowledged this, noting that the FIDD stablecoin is positioned to provide on-chain utility for investors.

Beyond on-chain, users of Fidelity Digital Assets, Fidelity Crypto, and Fidelity Crypto for Wealth Managers will also be able to purchase and redeem the stablecoin on the platforms

Unsurprisingly, the stablecoin will comply with the new GENIUS stablecoin framework as its reserves will be in cash and US Treasuries. It is already positioning itself as an institution-friendly, regulatory-compliant stablecoin, with Fidelity Management & Research Company serving as the custodian of the reserve assets.

The firm said:

“FIDD will seek to provide investors with a stable digital dollar that combines the benefits of digital assets and blockchain technology with the stability and reliability of the U.S. dollar. FIDD will be backed by the stringent operational standards of Fidelity Digital Assets.”

Competition Among Stablecoin Issuers Heats Up

Meanwhile, Fidelity’s foray into the Stablecoin space is not surprising given that it has been involved in the digital assets sector since 2014. The $6.8 trillion asset manager already has spot exchange-traded funds for Bitcoin and Ethereum.

However, issuing a stablecoin makes it one of the first traditional financial institutions to do so. It also marks an entry into a $316 billion sector that already has many established players, particularly Tether and Circle with USDT and USDC.

The regulatory clarity provided by the GENIUS Act is instrumental to Fidelity’s venture into stablecoin issuance. However, the firm cannot rely solely on regulatory compliance to secure adoption of FIDD, especially given that USDC is already established and Tether recently launched the USAT stablecoin in the US.

Interestingly, more traditional institutions could get involved with stablecoins. Already, a group of banks, including Bank of America, Goldman Sachs, Citi, Deutsche Bank, Barclays, BNP Paribas, and Banco Santander, is reportedly exploring launching stablecoins for G7 currencies.