Fidelity Investments is launching the Fidelity Digital Dollar (FIDD) stablecoin in early February to compete in the $308 billion stablecoin market dominated by Circle’s (NYSE:CRCL) USDC (CRYPTO: USDC) and Tether’s USDT (CRYPTO: USDT).
FIDD: How It Works
The stablecoin will be issued by Fidelity Digital Assets, a federally chartered national trust bank that received approval from the Office of the Comptroller of the Currency in December.
FIDD is pegged 1-to-1 to the U.S. dollar and backed by cash and short-term U.S. Treasuries.
For every FIDD token in circulation, Fidelity holds $1 in reserves—just like how Circle and Tether back their stablecoins.
The reserves comply with the GENIUS Act, the federal law passed in July that set clear rules for how stablecoin companies must hold and manage their backing assets.
Moreover, FIDD runs on Ethereum (CRYPTO: ETH) and will be available on Fidelity’s crypto platforms plus major crypto exchanges.
Users can transfer it to any Ethereum address, meaning it works across decentralized finance protocols and blockchain apps.
Fidelity will publish reserve values daily on its website with regular third-party audits to verify the backing.
Why Fidelity Is Doing This
Mike O’Reilly, president of Fidelity Digital Assets, said stablecoins enable “real-time settlement, 24/7, low-cost treasury management” for both retail and institutional clients.
Here’s what that means in practice: traditional wire transfers shut down at 5pm and don’t work on weekends.
Stablecoins settle instantly, any time, including holidays. For institutions moving large amounts of money internationally, that’s a massive upgrade.
For retail users, FIDD enables on-chain payments and access to DeFi protocols without leaving the Fidelity ecosystem.
O’Reilly said the GENIUS Act made this “the right time” because it created a clear regulatory framework. Companies now know exactly how to operate stablecoins legally in the U.S.
The Competition Heats Up
Fidelity enters a market dominated by crypto-native companies. Circle’s USDC and Tether’s USDT control most of the $308 billion stablecoin market.
Tether just announced Tuesday it’s launching USAT, a U.S.-compliant stablecoin.
That puts three major players—Fidelity, Circle, and Tether—competing directly for U.S. clients.
Fidelity’s advantage is its existing client base and infrastructure.
The company already offers crypto custody, trading, a retail crypto app, and a crypto IRA product. FIDD plugs directly into those services.
When one of the world’s largest asset managers launches a stablecoin, it signals traditional finance is moving aggressively into blockchain-based payments.
Image: Shutterstock
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