Fidelity launches AAA-rated tokenized fund via Chainlink – Details

Asset manager Fidelity has unveiled a highly rated and regulated on-chain yield product as the race for institutional tokenized money market funds tightens. 

The product, Fidelity USD Digital Liquidity Fund [FILQ], is issued by the asset manager but leverages Syngnum Bank’s tokenized infrastructure.

Its on-chain data will be handled by Chainlink and comes with Moody’s AAA rating, the highest assessment level, making it only second to BlackRock’s BUIDL. 

So what exactly does it solve? Well, FILQ is betting on surging demand for tokenized assets and the need for 24/7 liquidity for on-chain firms’ operations across all global time zones.

This calls for treasury cash management that should not only be instantly redeemable but also productive by earning interest. 

Worth noting that this is the same category that most yield-paying tokenized money market funds, like BlackRock’s BUIDL and JPMorgan’s JLTXX, are betting on. 

Think of them as USDT but with an automatic yield feature. The yield comes from the interest income gained from investing the product’s reserves into U.S. Treasury bonds, hence the ‘money market fund’ name. 

Tokenized money market funds heat up

And the yield incentive has been the largest growth driver. According to data aggregated by RWA, the tokenized money market fund segment remains the fastest-growing sub-sector, excluding stablecoins. 

Since 2025, the sub-sector has expanded from $4B to $15.2B, marking nearly a four times jump in demand. 

When bundled together, the broader yield-paying ‘stablecoin’ segment has seen a slight retreat since mid-April.

However, performance has been varied across each product. According to StableWatch data, Circle’s USYC, Ondo’s USDY, BlackRock’s BUIDL, and Sky Protocol’s sUSDS saw significant growth in the past 90 days. 

Strikingly, Ethena’s USDe led the outflows with a whopping $1.8 billion in redemptions. Marple’s products, syrupUSDC, followed suit in bleedout.

These are products that get yield from DeFi strategies. But the recent exploits and DeFi contagion could have triggered investor flight to alternatives from Circle, Ondo, and BlackRock. 

Notably, Circle, Ondo, and BlackRock get their yield from U.S. government debt, hence deemed relatively safe. As mentioned earlier, this is where Fidelity’s new product is aiming to compete. 

Sky’s sUSDS also posted strong growth as it uses a hybrid model, both DeFi strategies and direct off-chain methods, to generate interest for investors. It remains to be seen how the new rivals will compete as the segment gets crowded.  

Final Summary

• Fidelity has jumped into the tokenized money market fund race, with the highest assessment rating of AAA from Moody’s. 
• The move comes at a time when the tokenization boom has seen the tokenized money market funds sector expand from $4B to over $15B since last year.