Fidelity Investments launched a new government money market fund designed to serve as a vehicle for stablecoin issuers.
The Fidelity Reserves Digital Fund (FYMXX) aims to deliver maximum current income while preserving capital and maintaining liquidity, according to the fund's prospectus. Shares are offered to institutional investors, including stablecoin issuers. The money market fund launched on June 15.
"Fund shares are expected to be held primarily by one or more stablecoin issuers as all or a portion of the reserve assets that back the stablecoins issued to their customers," the prospectus said.
Fidelity's new fund invests exclusively in eligible reserve assets permitted for stablecoin issuers under the GENIUS Act. These include U.S. Treasury bills, notes and bonds, cash, overnight repurchase agreements, and other government money market funds that are compliant with the stablecoin regulations.
The fund has a minimum initial investment of $1 million, which may be waived or lowered at the fund’s discretion. The fund seeks to maintain a stable net asset value of $1.00 per share. It has a management fee of 0.25%.
The prospectus also noted that fund assets are expected to fluctuate due to the creation of additional stablecoins or the redemption of existing stablecoins, especially during times of market uncertainty or volatility.
Fidelity's latest launch came amid a wave of investment companies launching similar products. Earlier this week, State Street launched its GENIUS-aligned stablecoin reserves money market fund. BNY Mellon, Goldman Sachs, and BlackRock launched similar funds last year.
Stablecoins have been growing at a rapid pace, especially after the U.S. passed the GENIUS Act. The total stablecoin market capitalization stood at around $315 billion as of today, with Tether's USDT making up 59% of the market, according to DefiLlama data.