• Fidelity Investments announced it will launch its first stablecoin product, Fidelity Digital Dollar, on Ethereum in the coming weeks.
• Fidelity will oversee the issuance and reserve management of the token.
• The announcement comes as lawmakers deliberate on whether stablecoin issuers will be able to share yield with customers under the CLARITY Act.

Fidelity Investments announced that it will launch its first stablecoin, the Fidelity Digital Dollar (FIDD), making it one of the first large traditional firms in the US to do so.

The company will leverage the Ethereum blockchain to roll out the product to retail and institutional investors in the coming weeks, according to a press release on Wednesday. Fidelity's subsidiary, Fidelity Digital Assets, a federally chartered national bank, will handle FIDD's issuance, while its asset management arm will oversee the token's reserve. 

The firm said customers will be able to access the token on major crypto exchanges and can redeem it for $1 across Fidelity crypto platforms, including Fidelity Digital Assets, Fidelity Crypto and Fidelity Crypto for Wealth Management.

Mike O'Reilly, President of Fidelity Digital Assets, highlighted that FIDD's launch comes on the back of years of research and development.

"At Fidelity, we have a long-standing belief in the transformative power of the digital assets ecosystem and have spent years researching and advocating for the benefits of stablecoins," said O'Reilly.

GENIUS Act paved the way for stablecoin growth in the US

The launch follows crypto regulatory progress in the US, including the passage of the GENIUS Act for stablecoin regulation last July.

"We're thrilled to launch a fiat-backed stablecoin at a time of increasing regulatory clarity to better support our customers' needs, provide choice in the marketplace, and enable continued progress towards a more efficient financial system," added O'Reilly.

The asset manager reportedly tested a stablecoin early last year, but it didn't confirm any of the rumors at the time.

Fidelity's entry into the stablecoin market comes just one day after Tether unveiled its USAT token on Tuesday, designed specifically for the US market under the GENIUS Act framework.

The timing proves critical as lawmakers continue deliberating key provisions of the CLARITY Act that could determine whether stablecoin issuers will be permitted to share yield with customers. Banking lobbyists have argued that allowing third-party platforms, such as crypto exchanges, to pay interest on stablecoins would create unfair competition for deposits, potentially draining billions from traditional banks.

Standard Chartered's Head of Digital Assets Research, Geoffrey Kendrick, predicted on Tuesday that $500 billion in deposits could migrate from banks to stablecoins by 2028.