Fidelity Enters the Competition for Managing Stablecoin Reserves on Wall Street

Following State Street, Fidelity is focusing on reserve assets that support the growing stablecoin market.

— Fidelity Investments is set to introduce the Fidelity Reserves Digital Fund, a money market fund designed to manage reserves for stablecoin issuers and institutional investors under the newly established GENIUS Act, on Thursday.

— This initiative comes after State Street launched a comparable stablecoin-reserve money market fund, indicating a growing rivalry among conventional asset managers for a market that could potentially reach trillions of dollars.

— The GENIUS Act mandates that payment stablecoin issuers maintain reserves in cash, short-term U.S. Treasuries, and eligible government money market funds, generating new interest in regulated options like Fidelity’s and State Street’s products.

Fidelity Investments is the latest firm on Wall Street aiming to take part in one of the rapidly expanding sectors of digital assets: the management of reserves backing stablecoins.

The asset management company is unveiling the Fidelity Reserves Digital Fund, a money market fund tailored for stablecoin issuers and institutional investors according to the reserve requirements set by the recently passed GENIUS Act, on Thursday.

The launch follows shortly after State Street revealed a similar offering, the State Street Stablecoin Reserves Money Market Fund, highlighting the increasing competition among traditional financial institutions for a market that could balloon into the trillions of dollars if stablecoins gain a more significant role in the global financial framework.

Stablecoins — digital tokens linked to assets like the U.S. dollar — have developed into an approximate $320 billion market and are widely utilized for trading, payments, and international transfers. Industry projections cited by State Street suggest that the sector may grow to between $1.9 trillion and $4 trillion by 2030 as institutional adoption rises.

Such growth would necessitate a corresponding pool of reserve assets that must be allocated to highly liquid investments.

The GENIUS Act, enacted last year, created the first federal framework for payment stablecoins in the United States. Among other stipulations, issuers are required to maintain reserves in cash, short-term Treasury securities, and select government money market funds.

This legislation has opened a door for traditional asset managers to provide regulated options that stablecoin issuers can utilize to manage their reserves while also earning returns.

Fidelity’s fund will invest in U.S. Treasury bills, notes, and bonds with maturities of 93 days or fewer, cash, overnight repurchase agreements secured by Treasuries, and other government money market funds that comply with the law.

«Fidelity has a long-standing expertise in fixed income and money markets, positioning us uniquely to offer a money market fund for stablecoin issuers that adheres to the new GENIUS-Act regulations,» stated Robin Foley, Fidelity’s head of fixed income.

While Fidelity’s announcement emphasized reserve management, State Street framed its launch as part of a broader initiative into tokenized finance through collaborations with crypto firms like Anchorage Digital and products intended for on-chain liquidity management.

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In May, combined exchange volumes decreased by 3.45% to $4.41T; the lowest level since September 2024. RWA perpetual futures volumes increased by 10.4% against this trend, reaching a new all-time high.

In May, combined exchange volumes decreased by 3.45% to $4.41T; the lowest level since September 2024. RWA perpetual futures volumes increased by 10.4% against this trend, reaching a new all-time high.

Why it matters:

In May, combined exchange volumes decreased by 3.45% to $4.41T; the lowest level since September 2024. RWA perpetual futures volumes increased by 10.4% against this trend, reaching a new all-time high.