Fidelity Investments has formally called on the U.S. Securities and Exchange Commission to establish clearer rules for broker-dealers operating in crypto markets, citing regulatory uncertainty as a key barrier to broader adoption of digital asset trading within traditional financial systems.
In a letter dated March 20 and addressed to the SEC’s Crypto Task Force, the firm outlined a series of recommendations aimed at integrating crypto assets into the existing market structure while preserving investor protection and market integrity. The submission responds to a request for information issued by Commissioner Hester Peirce.
Fidelity Outlines Four Key Regulatory Priorities
At the core of Fidelity’s argument is the need for continued development of a regulatory framework that allows broker-dealers to offer, custody, and trade crypto assets.
While the firm acknowledged recent guidance from the SEC, including clarifications from Chairman Paul S. Atkins, it stressed that further direction is required for firms to operate confidently in the space.
Fidelity also urged the SEC to establish clear standards for trading tokenized securities on alternative trading systems. It warned that the classification of tokenized assets often depends on their economic structure, creating uncertainty for broker-dealers that must determine whether such instruments qualify as securities or fall under more complex categories like securities-based swaps.
In addition, the firm called on regulators to address the coexistence of traditional intermediated markets and decentralized, blockchain-based platforms.
While decentralized systems may offer benefits such as faster settlement and lower costs, Fidelity noted they also lack the regulatory safeguards applied to broker-led systems, raising concerns around oversight and investor protection.
Push to Enable On-chain Integration in Securities Markets
Fidelity further recommended that the SEC revisit existing rules to accommodate blockchain-based infrastructure within regulated markets.
Specifically, the firm highlighted that current recordkeeping requirements do not account for distributed ledger technology, limiting the ability of trading platforms to adopt on-chain systems.
It also requested clarity on whether broker-dealers facilitating on-chain settlement could be classified as clearing agencies.
Fidelity argued that such activities should fall within traditional brokerage functions, warning that misclassification could impose unnecessary regulatory burdens and slow innovation.
The letter is a broader push by institutional players to modernize market infrastructure as tokenization gains traction. Fidelity maintained that aligning regulatory frameworks with emerging technologies will be essential to support efficient, transparent, and competitive markets while ensuring investor protection remains intact.
