In early February, Fidelity will launch its own "stablecoin" under the ticker FIDD on the Ethereum blockchain. This was reported by Bloomberg citing the company's press release.

The issuer will be Fidelity Digital Assets, a subsidiary of Fidelity Investments that holds a federal banking license.

The stablecoin will be backed 1:1 by the US dollar. It can be converted at par on Fidelity's own crypto platforms (Fidelity Digital Assets, Fidelity Crypto, and Fidelity Crypto for Wealth Managers) as well as on major cryptocurrency exchanges.

Company representatives emphasized that the creation of this asset is a response to growing client demand and part of a strategy to enhance the practical utility of blockchain-based financial instruments.

"This is truly the next step in the evolution of our digital asset platform," commented Mike O'Reilly, president of Fidelity Digital Assets.

FIDD is designed as a tool for round-the-clock settlements between institutional traders, as well as for on-chain payments in the retail segment.

The token can be freely transferred to any address on the Ethereum mainnet, ensuring its integration with the DeFi ecosystem and other blockchain platforms.

Fidelity confirmed that the reserves for FIDD will consist of cash, cash equivalents, and short-term US Treasury bonds. This fully complies with the requirements of the Genius Act, signed into law in July.

According to O'Reilly, the law was a key catalyst for the company's decision to launch a stablecoin:

"The document provides clear regulatory frameworks: what reserves should look like and how to manage them. This is beneficial for the entire industry and made this moment suitable for launching our product into the market."

Stablecoin Boom in the US

As early as last year, the Financial Times noted the plans of several global banks and fintech companies to launch "stablecoins." Journalists described the trend as a "stablecoin race."

Activity in the sector has been significantly boosted by the passage of the Genius Act in the US, where USDC from the regulated issuer Circle leads the market. Recently, the company's main competitor, Tether, also launched a separate token, USAT, for the American market.

Source: CoinGecko.

Previously, the head of payments and RWA at Polygon, Aishwarya Gupta, predicted the emergence of 100,000 fiat-pegged assets by 2029. He believes the market has entered the initial phase of a "supercycle" for stablecoins.

However, the expert pointed out the risks for banks—"stablecoins" offer investors yields unavailable in the traditional system. Standard Chartered and Bank of America have already acknowledged the potential for billions of dollars to flee from traditional deposits into stablecoins.

The issue of yields on such assets has become a central topic of discussion among American lawmakers. The latest version of another important industry bill—the Clarity Act—prohibits issuers and other crypto service providers from paying interest on "stablecoins."

Banks are actively lobbying for restrictions, but leaders in the cryptocurrency sector oppose this. Coinbase CEO Brian Armstrong stated that the revised proposal is "significantly worse than the current situation."

SkyBridge Capital founder Anthony Scaramucci noted that a ban on yield-bearing stablecoins puts the US dollar at a disadvantage compared to China's digital yuan.

Recall that McKinsey and Artemis Analytics found that the volume of transactions with "stablecoins" could reach $35 trillion by 2025. However, only about $390 billion is associated with actual payments, which is roughly ~0.02% of the global figure.