Fidelity’s decision to launch its new stablecoin on Ethereum is sparking fresh discussion over whether public blockchains are becoming the preferred infrastructure for large financial institutions.
Announced earlier today, the Fidelity Digital Dollar (FIDD) will run on the Ethereum blockchain and be backed by cash, cash equivalents and short-term U.S. Treasuries. Designed for institutional settlement and retail payments, the stablecoin can be transferred to any Ethereum mainnet address, according to a press release.
Industry experts said Fidelity’s choice to launch on Ethereum stands out because large financial institutions have typically favored private or privacy-focused blockchains for onchain products. For instance, J.P. Morgan’s blockchain unit, Kinexys, said earlier this month that it plans to issue the firm’s JPM Coin (JPMD) on the Canton Network, a public but privacy-focused Layer 1.
Just weeks before that, the Depository Trust & Clearing Corporation (DTCC) said it would also use Canton to test tokenized U.S. Treasuries, citing its privacy features, The Defiant previously reported.
An Unexpected Move
“Fidelity’s decision to launch FIDD on public Ethereum rather than a private chain is the inverse of what we’d have predicted two years ago – and it’s the clearest signal yet that institutional finance has accepted public blockchains as the default infrastructure,” Marcin Kazmierczak, co-founder of RedStone, told The Defiant.
He said the GENIUS Act has made private blockchains less attractive by clearly setting rules for how stablecoin reserves must be managed and disclosed. In turn, this has made regulated stablecoins on public networks like Ethereum easier to trust than private systems that offer less transparency.
“Ethereum’s open liquidity ecosystem, major exchange support, and interoperability with Layer 2s unlock use cases a private network never could,” Kazmierczak added. The Ethereum blockchain currently has a total value locked (TVL) of over $74 billion.
