Citi and Fidelity Announce On-Chain Money Market Fund

Citi and Fidelity International announced a proof-of-concept on-chain money market fund today, becoming the two newest financial institutions to enter the tokenization space.

The proof-of-concept, which is set to be displayed at the Singapore FinTech Festival Nov. 6-8, is a tokenized money market fund (MMF) with an embedded foreign exchange (FX) swap for efficient on-chain money management.

MMF’s are traditional investment funds that invest in short-term debt instruments, usually in the form of U.S. Treasury bills. The move to place these MMF’s onchain is becoming increasingly popular as it allows for more transparency, faster and easier position management, instant redemptions, and the potential to integrate with Decentralized Finance (DeFi).

Head of FX Sales at Citi, Sam Hewson said, “as tokenization continues to evolve in capital markets, we see a potential future in which investors could trade and settle digital assets in real-time, in different currencies, and across multiple distributed ledger technology platforms.”

This announcement comes just three days after UBS launched its first tokenized investment fund.The asset management company, which controls over $3 trillion in assets under management, announced uMINT, the UBS USD Money Market Investment Fund Token.

Upon the launch Thomas Kaegi, Co-Head of UBS Asset Management, said, “We have seen growing investor appetite for tokenized financial assets across asset classes. Through leveraging our global capabilities and collaborating with peers and regulators, we can now provide clients with an innovative solution.”

These funds will all contribute to the expanding real-world asset (RWA) market, which broke $13 billion for the first time last week according to RWA.xyz.

Total RWA value, which largely consists of private credit, is up 41% over the last year. These MMF’s will contribute to the U.S. Treasury Debt portion of the total onchain RWA valuation, which currently makes up for about 18% the total market capitalization