Fidelity launches dollar-backed stablecoin FIDD under U.S. regulatory approval

Fidelity is launching a stablecoin. The token, called FIDD, stands for Fidelity Digital Dollar and will be backed 1:1 with U.S. dollars and short-term treasuries. It’s being issued by Fidelity Digital Assets, National Association, which got conditional approval from the Office of the Comptroller of the Currency in December.

The company says both retail and institutional investors will be able to use the token in the coming weeks. The reserves for the coin will be handled by Fidelity Management & Research Company LLC.

FIDD will be listed on the Fidelity Digital Assets, Fidelity Crypto, and Fidelity Crypto for Wealth Managers platforms. It will also be tradable on crypto exchanges and transferable to any Ethereum mainnet address.

Fidelity outlines core purpose of the digital dollar

Mike O’Reilly, president of Fidelity Digital Assets, said the company sees stablecoins as part of the future of finance. “Real-time settlement, 24/7, low-cost treasury management are all meaningful benefits that stablecoins can bring to both our retail and our institutional clients,” Mike told Bloomberg.

Stablecoins are designed to stay at a fixed price, usually pegged to the U.S. dollar, and are supported by reserves like cash and short-term government debt. Their use has expanded since July, after the Genius Act became law. It was the first federal rule specifically for stablecoin issuers.

The Genius Act paved the way for more companies to jump in. Fidelity is joining a long line of other asset managers and fintech startups entering the space. The company made it clear that FIDD is being built for both day-to-day transactions and larger institutional settlement needs.

The new token drops into a crowded market. Circle already has USDC, Tether runs USDT, and now Fidelity is offering FIDD. All of them are pegged to the dollar. The difference here is who’s backing them. Fidelity brings a long-established financial brand into a space usually led by crypto startups.

Standard Chartered sees big risk to banks from stablecoin growth

Geoff Kendrick, who leads digital assets research at Standard Chartered, said the rise of stablecoins could cost U.S. banks as much as $500 billion in deposits by the end of 2028. He linked this potential loss to more people shifting from regular bank accounts into digital coins like FIDD.

Kendrick’s team estimates that bank deposits will drop by around one-third of the stablecoin market size. Right now, that market has climbed to just over $300 billion, up roughly 40% in the last year. The data comes from DeFi Llama.

He said this trend is likely to grow even faster if the Clarity Act, a new regulatory bill for digital assets, makes it through Congress. The bill is currently in progress.

“US banks also face a threat as payment networks and other core banking activities shift to stablecoins,” Kendrick wrote in his report.

Kendrick also warned that crypto firms like Coinbase are offering rewards on stablecoin balances, something banks can’t match without cutting into profits. Coinbase currently offers 3.5% rewards on balances of USDC.

Coinbase and banks clash over stablecoin rewards

Brian Armstrong, CEO of Coinbase, criticized banks for trying to shut down the competition. Speaking in Davos, he said, “The bank lobbying groups and bank associations are out there trying to ban their competition. I have zero tolerance for that, I think it’s un-American, and it harms consumers.”

Standard Chartered’s research shows the conflict isn’t going away. Kendrick said the digital-asset market bill is expected to pass by the end of the first quarter. That would clear up the legal status of stablecoins, how rewards are handled, and what banks are allowed to do in response.

Kendrick used net interest margin (NIM) as a key metric to track deposit risk. NIM shows how much of a bank’s revenue depends on customer deposits. He found that smaller regional banks are most exposed.

He looked at 19 U.S. banks and brokerages. The four most vulnerable were Huntington Bancshares, M&T Bank, Truist Financial, and Citizens Financial Group. These banks rely more on lending, so losing deposits would hit them harder than it would for large investment banks.

Even with all this, banks have seen some recent gains. The KBW Regional Banking Index jumped nearly 6% in January. That beat the KBW Bank Index, which only rose by a little over 1%.

Kendrick said rate cuts could help banks in the short term by making deposits cheaper. The administration’s push to boost economic growth could also increase loan demand. But he made it clear that the bigger shift to digital money is coming.

“An individual bank’s actual exposure to a stablecoin-driven reduction in NIM income will depend largely on its own response to the threat,” Kendrick wrote.

He also pointed out that Tether and Circle, the two biggest stablecoin issuers today, only keep a tiny share of their reserves in actual banks. Tether holds 0.02%, and Circle holds 14.5% in deposits. “Very little re-depositing is happening,” he said.

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