Fidelity Investments announced Wednesday it will launch its first stablecoin in early February, entering a market dominated by Tether (USDT) and Circle (USDC) that recorded $311 billion in total capitalization this month.
The Fidelity Digital Dollar will operate on Ethereum (ETH) through Fidelity Digital Assets, a federally chartered national bank subsidiary.
The stablecoin maintains reserves of cash, cash equivalents, and short-term U.S. Treasuries following requirements established under the GENIUS Act, which President Trump signed into law in July 2025.
Fidelity will disclose coin issuance and reserve values daily on its website, with regular third-party attestations verifying the backing.
The company handles reserves through its in-house investment advisor, Fidelity Management & Research.
What Happened
The token targets 24/7 institutional settlement and onchain retail payments across Fidelity's crypto trading platforms. Users can transfer FIDD to any Ethereum mainnet address, enabling use in decentralized finance protocols.
Fidelity President Mike O'Reilly said the GENIUS Act provided regulatory clarity that made the launch viable.
The legislation requires stablecoin issuers to maintain one-to-one reserve backing with U.S. dollars or high-quality liquid assets, mandates regular audits, and limits issuance to banks and approved nonbank entities.
The stablecoin charges no transaction or foreign exchange fees and applies a 0.4% market spread when converting to fiat at point of purchase. Fidelity said it may expand to additional blockchains or layer-2 networks beyond the initial Ethereum deployment.
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Why It Matters
Fidelity enters competition against Tether's USDT, which holds $187 billion in circulation, and Circle's USDC at $74 billion. Tether announced USAT, a U.S.-compliant stablecoin, on Tuesday as major financial institutions respond to regulatory standardization.
PayPal and Ripple (XRP) launched stablecoins in recent years but neither captured 10% of Circle's market share. The crowded field reflects institutional interest following regulatory clarity, though adoption remains concentrated among established issuers.
The GENIUS Act took effect 18 months after passage or 120 days after final implementing regulations, establishing federal and state supervision over payment stablecoin issuers. Market observers view the framework as encouraging institutional participation while raising compliance costs for smaller players.
Fidelity operates custody, trading, retail crypto apps, and a crypto IRA product introduced in 2025. The stablecoin extends its blockchain infrastructure, though successful competition against dominant issuers will require distribution networks beyond Fidelity's existing client base.
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