Fidelity Investments has formally asked the U.S. Securities and Exchange Commission to set clearer rules for broker-dealers operating in crypto markets, saying regulatory uncertainty remains a major barrier to bringing digital asset trading deeper into traditional finance.
In a letter dated March 20 to the SEC’s Crypto Task Force, the firm laid out a set of recommendations designed to fit crypto assets into the existing market structure while keeping investor protection and market integrity in place. The submission was made in response to a request for information from Commissioner Hester Peirce.
Fidelity flags four areas needing clearer guidance
At the center of the letter is Fidelity’s view that the regulatory framework still needs to develop so broker-dealers can offer crypto trading, custody, and related services with greater certainty. The firm said recent SEC guidance, including clarifications from Chairman Paul S. Atkins, has helped, but not enough for firms to operate in the sector with confidence.
Fidelity also asked the SEC to define clear standards for trading tokenized securities on alternative trading systems. According to the firm, the classification of tokenized assets often depends on their economic structure, leaving broker-dealers to decide whether an instrument should be treated as a security or placed in more complex categories such as securities-based swaps.
The letter also addressed the overlap between traditional intermediary-based markets and decentralized blockchain platforms. Fidelity said decentralized systems may bring benefits such as faster settlement and lower costs. It also said those systems do not carry the same regulatory safeguards found in broker-led models, which raises questions about oversight and investor protection.
On-chain settlement and recordkeeping remain unresolved
Fidelity urged the SEC to revisit existing rules so regulated markets can accommodate blockchain-based infrastructure. It pointed in particular to recordkeeping requirements, arguing that current rules do not properly account for distributed ledger technology and that this limits trading platforms looking to adopt on-chain systems.
The firm also asked for clarity on whether broker-dealers that facilitate on-chain settlement could be treated as clearing agencies. Fidelity argued those activities should remain within the scope of traditional brokerage functions. A different classification, it said, could create unnecessary regulatory burdens and slow innovation.
Institutional pressure grows as tokenization expands
The letter reflects a wider effort by institutional firms to modernize market infrastructure as tokenization gains traction. Fidelity said regulatory frameworks need to align with emerging technologies if markets are to remain efficient, transparent, and competitive while preserving investor protection.