Fidelity launches stablecoin reserve fund under GENIUS Act framework

Fidelity Investments has launched a money market fund aimed at stablecoin issuers and institutional investors seeking to meet reserve requirements under the GENIUS Act.

Summary

• Fidelity has launched a money market fund designed to help stablecoin issuers meet reserve requirements under the GENIUS Act.
• The new Fidelity Reserves Digital Fund will invest in cash, short term U.S. Treasuries, and other eligible assets permitted under federal stablecoin rules.
• Fidelity joins State Street in targeting the stablecoin reserve management market as institutions prepare for expected growth in digital dollar issuance.

Fidelity said on Thursday that the new Fidelity Reserves Digital Fund will invest in cash, short-term U.S. Treasury securities, overnight repurchase agreements backed by Treasuries, and government money market funds that qualify under the federal stablecoin framework.

The launch places Fidelity among a growing group of traditional financial firms offering products tailored to stablecoin reserve management. State Street introduced a similar product this week through its State Street Stablecoin Reserves Money Market Fund, which was also designed for issuers operating under the GENIUS Act.

Robin Foley, Fidelity’s head of fixed income, said the firm’s experience in fixed income and money markets positions it to provide a compliant reserve management solution for stablecoin issuers under the new legislation.

Fidelity expands stablecoin strategy

The new fund adds to Fidelity’s stablecoin business, which expanded earlier this year with the introduction of the Fidelity Digital Dollar, or FIDD.

At the time, Fidelity Digital Assets said the U.S. dollar-backed stablecoin would serve both retail and institutional investors and would be supported by Fidelity’s reserve management infrastructure. Mike O’Reilly, president of Fidelity Digital Assets, said the company had spent years researching stablecoins and viewed regulatory clarity as an important step for adoption.

The GENIUS Act established the first federal framework for payment stablecoins in the United States. Among its requirements, issuers must maintain reserves in cash, short-dated Treasury securities, and certain government money market funds.

Fidelity said the Fidelity Reserves Digital Fund will hold Treasury bills, notes, and bonds with maturities of 93 days or less. The portfolio will also include cash balances and overnight repurchase agreements secured by Treasury securities.

Asset managers target stablecoin reserves market

Asset managers have begun introducing products that align with the reserve standards established under the new law.

State Street said this week that its reserve fund was created to help issuers satisfy GENIUS Act requirements. State Street Bank and Trust Company and Anchorage Digital joined the launch as initial backers.

State Street Chief Executive Officer Yie-Hsin Hung said the legislation established a framework for how stablecoin reserves can be invested. Anchorage Digital Chief Executive Officer Nathan McCauley said reserve management would become increasingly important as stablecoin usage expands.

Industry projections cited by State Street estimate that global stablecoin issuance could reach between $1.9 trillion and $4 trillion by 2030. If those forecasts materialize, issuers would need to place a substantially larger volume of reserve assets into highly liquid investments permitted under the law.

Stablecoins, which are typically pegged to the U.S. dollar, currently account for roughly $320 billion in market value and are widely used for trading, payments, and cross-border transfers.