The news: Fidelity announced plans to launch its first stablecoin, the Fidelity Digital Dollar, for both retail and institutional investors. The firm will manage the assets that back the stablecoin and distribute it through its Fidelity Digital Assets crypto trading and custody business. The coin will also be available on major crypto exchanges.

Zoom out: Fidelity is among the first traditional financial institutions (FIs) to issue a dollar-backed stablecoin and one of even fewer to make it available to retail customers. Fidelity has leaned hard into digital assets for both retail and institutional use, well ahead of its traditional peers. Since at least 2017, executives have expressed enthusiasm for crypto, and it formed Fidelity Digital Assets in 2018.

Dollar-backed stablecoins have existed since 2014 when Tether launched the USDT stablecoin. Gemini, Paxos, and Circle/Coinbase stablecoins followed in 2018. It hasn’t all been smooth sailing: TerraUSD, a stablecoin synthetically linked to the dollar, blew up in 2022. And Circle’s USDC briefly dipped below $1 after Silicon Valley Bank collapsed.

Implications for banks: The Wild West of stablecoins, which paled in comparison to the early days of cryptocurrencies as speculative assets, has now mostly ended. The US government has passed legislation that guides pending regulations. And institutional stablecoin custody, trading, and issuance, have quickly gained acceptance among FIs besides Fidelity. The stablecoins in circulation account for billions of dollars: Tether’s USDT has a market cap of $186 billion, and it’s $70.6 billion for USDC.

Some stablecoin issues remain unsettled. Regulation will apply specifically to payment stablecoins—tokens used to transact, not as a deposit-equivalent, although a loophole allows “interest” to be paid. A bill to address that issue has been held up as the banking and crypto industries bicker about the implications. But forward-thinking institutions like Fidelity aren’t waiting for certainty.