Fidelity is stepping directly into the stablecoin business, but not by issuing its own token. Instead, it has launched a new government money market fund specifically designed to hold the reserves backing regulated U.S. payment stablecoins under the GENIUS Act.
Fidelity Reserves Digital Fund Targets Stablecoin Treasuries
Fidelity Investments unveiled the Fidelity Reserves Digital Fund this week as a money market fund aimed at stablecoin issuers and large institutions. The company structures the fund to comply with the GENIUS Act’s reserve rules, which require U.S. payment stablecoins to be backed 1:1 by high‑quality, liquid assets rather than risky investments. Fidelity says the fund will invest in cash and short‑term U.S. securities, Treasury securities, overnight repos backed by Treasuries, and qualifying government money market funds.
Unlike a crypto-native product, Fidelity structures the Reserves Digital Fund as a conventional, regulated money market fund and may later add a blockchain‑based share class.
That design lets stablecoin issuers park billions of dollars of reserves inside a familiar mutual fund wrapper while still ticking the boxes set by federal regulators. Industry analysts say Fidelity is joining State Street and other asset managers in a race to win what could become a multi‑trillion‑dollar stablecoin reserve business.
GENIUS Act Sets the Ground Rules
The GENIUS Act, passed in 2025, created the first full federal framework for payment stablecoins in the United States. It says only “permitted payment stablecoin issuers” can offer dollar‑pegged tokens to U.S. users and forces them to keep 100% reserves in cash, short‑dated Treasuries, and specific government money market funds. The law also bars these payment stablecoins from paying interest to everyday holders and treats issuers as financial institutions under the Bank Secrecy Act.
Regulators at the Office of the Comptroller of the Currency and other agencies are now writing detailed rules on reserve assets, redemption, and risk management. The OCC’s draft rule caps Treasury maturities at 93 days for stablecoin reserves and calls for tight liquidity controls, which pushes issuers toward ultra‑short government funds like Fidelity’s new product.
By launching a GENIUS‑compliant fund, Fidelity is betting that many stablecoin issuers would rather outsource reserve management to a big asset manager than run their portfolios in‑house. The Crypto Council for Innovation noted that the move “creates an opportunity for traditional asset managers” as demand for secure, liquid reserve vehicles rises.
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