Fidelity builds its own stablecoin as crypto ETF launches

Financial management giant Fidelity Investments has expanded its presence in the cryptocurrency space by developing its own stablecoin.

The company is in the advanced stages of testing a stablecoin designed to act as cash in the cryptocurrency market. Fidelity's digital assets unit will manage the stablecoin.

Fidelity has been bullish on digital assets and blockchain technology for years and has been operating in the space for more than a decade.

The company's strategy is to leverage tokenized financial instruments, especially digital assets backed by U.S. Treasuries. Last week, Fidelity applied to launch a digital version of its U.S. money market fund, which is expected to go live by the end of May.

Competition and the broader stablecoin market

The stablecoin market is currently dominated by offshore issuers such as Tether (USDT) and Circle's USD Coin (USDC), with a total market value of more than $230 billion, according to CoinMarketCap.

Fidelity's entry into the space marks a growing trend of established financial companies integrating blockchain-based assets into traditional markets.

Meanwhile, the Trump family-backed World Liberty Finance (WLFI) is launching its own stablecoin that will be backed by U.S. Treasuries and other cash equivalents. The development reflects a broader trend of institutions integrating blockchain-based financial instruments into traditional markets.

The debate around stablecoins is intensifying in Washington, with lawmakers discussing competing bills to regulate their issuance and use.

While supporters argue that stablecoins strengthen the dominance of the U.S. dollar and increase liquidity in digital markets, critics warn that they present financial stability risks and potential avenues for consumer fraud.

Fidelity’s Dominance in Crypto ETFs

Beyond stablecoins, Fidelity is also expanding its influence in the cryptocurrency investment space. On March 24, its Bitcoin exchange-traded fund (ETF), Wise Origin Bitcoin Fund (FBTC), recorded $82.85 million in inflows, the highest of all Bitcoin ETFs on that day.

Fidelity has also applied for the first U.S. spot Solana ETF. Cboe BZX Exchange has submitted an application to the U.S. Securities and Exchange Commission (SEC) to list the product.

With the shifting regulatory environment under the Trump administration, the likelihood of altcoin ETFs getting approved seems greater.