Why Tokenize? Fidelity on Onchain Assets and the Next Phase of Adoption

**Cynthia Lo Bessette** (0:00)
We like to think about our product roadmap and really the strategy for how we continue to build this business through the lens of what does the pathway to the adoption of digital markets look like. The next phase of adoption we see as being able to use these assets on chain, making these tokenized assets useful to investors.

**SPEAKER_2** (0:19)
What is the advantage of doing that?

**Cynthia Lo Bessette** (0:21)
That is actually the most important question that I think anybody who is looking at tokenization has to start with, why are you bringing that asset on chain? What does it get to do on chain that it can't do today? Who are you doing it for? And how is that person going to be able to use that asset on chain?

**SPEAKER_2** (0:41)
Cynthia, thanks so much for being here.

**Cynthia Lo Bessette** (0:42)
Thank you so much for having me. This is a great location and fantastic weather.

**SPEAKER_2** (0:47)
We're glad you could make it. So you're in charge of digital asset management at Fidelity. Tell us what are you responsible for? What are you doing? What is going on inside of Fidelity when it comes to bridging TradFi and DeFi?

**Cynthia Lo Bessette** (1:00)
The division that I'm in sits within our asset management business at Fidelity. This unit was really dedicated and stood up within asset management only a few years ago, with the intention that from an asset manager's lens, understanding not just how to think about crypto assets as a new investable asset class, but also what does this technology and the evolution of our capital markets being driven by this technology mean for an asset manager? And so also from my team's lens, looking at building new applications and looking at new ways to be able to allocate capital on chain and also thinking about the flow of capital between traditional markets and on chain markets and this is where tokenization and tokenized fund wrappers becomes very interesting as we think about the evolution of asset management.

**SPEAKER_2** (1:56)
You oversaw the launch of one of the Bitcoin ETP products and also you have tokenized a money market fund. So yeah, what's going on? What kind of products are you launching? What's cooking over there? What can we expect in the future from your efforts?

**Cynthia Lo Bessette** (2:10)
We like to think about our product roadmap and really the strategy for how we continue to build this business through the lens of what does the pathway to the adoption of digital markets look like? And so we started with the premise of how do we help our clients to be able to get exposure to this asset class and that would be under the hold phase of adoption. So how do we help investors to get access to trade these assets and hold them in their portfolios and this is where the ETPs have been a fantastic way to introduce traditional investors to these on-chain assets. The next phase of adoption we see as being able to use these assets on-chain and where tokenizing assets is really not the hardest part of bringing assets on-chain, it's making these tokenized assets useful to investors and useful to investors in ways that are different from the way in which they can think of these assets in their brokerage accounts today. And from our standpoint, that means making these assets mobile on-chain, allowing investors to use them to deposit as collateral to be able to get access to capital on-chain or to be able to use these assets and make them more easily tradable into a more highly customizable portfolio. And then another use case that we are seeing a lot more adoption on is the ability to generate yield on-chain. And this native yield on-chain through staking is incredibly differentiated from traditional sources of yield and being able to package that yield into a traditional wrapper such as the ETP makes it very easily deliverable to a traditional investor and in another introduction into the utility of assets and of these on-chain markets. The third phase of adoption is what we've been calling the build phase. And this is where you have on-chain assets in an on-chain wrapper. And the ability to be able to deliver hyper-personalized exposures to investors with these both tokenized traditional assets as well as native on-chain assets, and then being able to construct portfolios on-chain.

**SPEAKER_2** (4:17)
You're talking about bringing assets on-chain. What is the advantage of doing that? What do you get from tokenizing an asset? And also, are there stages of becoming on-chain, like are you on-chain or off-chain, or is there some kind of gradation, a spectrum toward becoming fully on-chain?