Fidelity Investments has called on the U.S. Securities and Exchange Commission to accelerate its regulatory development for integrating crypto assets into existing market structures, particularly around alternative trading systems (ATS).
In a letter submitted Friday to the SEC Crypto Task Force, Fidelity said it broadly supports the agency's efforts to adapt legacy frameworks to emerging technologies, while emphasizing the need to preserve core principles such as investor protection, transparency and market integrity.
The letter was in response to Commissioner Hester Peirce's December request for information on how national securities exchanges and ATS platforms should handle crypto asset trading.
Fidelity outlined four key recommendations, starting with continued regulatory development for broker-dealers engaging with crypto assets. The firm pointed to recent SEC guidance clarifying that broker-dealers may custody both crypto asset securities and non-security digital assets, calling it a "welcome" step but noting that further clarity is still needed for trading and custody practices.
"[We] look forward to additional guidance on a number of other areas critical for broker-dealers to offer, custody, and trade crypto assets and facilitate crypto-security trading pairs," said Fidelity.
This builds on a series of incremental moves by the SEC. In recent months, the agency has clarified how broker-dealers can maintain custody of crypto assets and issued guidance on tokenized securities, signaling a gradual shift toward accommodating blockchain-based financial infrastructure.
Peirce has also repeatedly encouraged firms exploring tokenization to engage directly with regulators, underscoring a more open stance compared to prior enforcement-heavy approaches.
Tokenized securities
Meanwhile, a central focus of Fidelity's letter is the need for clearer rules governing tokenized securities on ATS platforms.
"The SEC should provide brightline standards that permit ATSs to facilitate secondary market trading in tokenized securities created by third parties," said Fidelity. "This clarity is critical because the regulatory status of a tokenized instrument depends on its economic realities, key facts that may not be fully knowable to a broker‐dealer."
The firm argued that broker-dealers must be able to rely on how a tokenized asset is classified — whether as a traditional security or a more complex instrument like a securities-based swap — without bearing excessive legal risk.
It also called for confirmation that tokenized versions of traditional securities should generally carry the same regulatory status as their underlying assets, which could help reduce fragmentation between on-chain and traditional markets.
Fidelity further urged the SEC to consider how traditional intermediated markets and decentralized, or "disintermediated," trading venues can coexist.
While blockchain-based platforms may offer benefits such as faster settlement, lower costs and increased transparency, the firm noted that they may lack the safeguards imposed on regulated intermediaries.
Also, Fidelity recommended that the SEC allow broker-dealers to use blockchain for recordkeeping and clarify that facilitating on-chain settlement would not classify them as clearing agencies.