Fidelity crypto regulation push seeks SEC clarity on tokenized

Industry heavyweight Fidelity crypto regulation concerns have escalated into a formal policy push as the firm presses Washington to clarify how digital assets and blockchain-based securities should be governed.

Fidelity urges SEC to build a clear digital asset rulebook

Fidelity Investments has filed a detailed appeal with the United States Securities and Exchange Commission, asking for a comprehensive regulatory framework for digital assets and blockchain-based securities. The correspondence, sent to the SEC’s Crypto Task Force on Friday, seeks firm guidance for broker-dealers and trading platforms.

The letter responds directly to SEC Commissioner Hester Peirce and her December inquiry, which requested industry input on how national securities exchanges and alternative trading systems should manage cryptocurrency-related operations. Moreover, Fidelity framed its submission as a constructive roadmap rather than a critique.

Fidelity welcomed the SEC’s broader effort to modernize market rules for emerging technologies. However, the asset manager warned that major gaps still exist in how regulations apply to digital assets, particularly around custody, trading operations, and market structure.

The firm highlighted four core policy priorities. First, it called for continued development of clear standards covering how broker-dealers interact with digital assets, from onboarding to trading and safekeeping. That said, Fidelity stressed that any new rules should build on existing securities regulation rather than reinvent it.

Broker-dealer crypto operations and custody

Fidelity acknowledged recent SEC guidance confirming that broker-dealers may custody both crypto securities and non-security digital assets. This recognition, the firm argued, marked important progress in aligning traditional market infrastructure with blockchain-based instruments.

However, Fidelity warned that significant uncertainty still surrounds day-to-day trading operations and custodial protocols. It argued that firms remain unsure how to structure order handling, settlement, and risk controls without triggering unexpected regulatory consequences.

In particular, the company asked the SEC to clarify how existing rules for national securities exchanges and alternative trading systems should apply to platforms that list and trade digital assets. Moreover, Fidelity urged the agency to avoid imposing duplicative or ill-suited compliance obligations on participants leveraging distributed ledger technology.

Regulatory framework for tokenized securities

A substantial portion of Fidelity’s letter focused on tokenized securities. These blockchain-linked instruments represent traditional assets such as equities, fixed income products, real estate holdings, and private credit, which are either issued on-chain or tracked through distributed ledger infrastructure.

Fidelity pressed the SEC to establish definitive rules allowing alternative trading systems (ATS) to facilitate trading in tokenized securities issued by third-party entities. The firm argued that platforms need regulatory certainty on asset classification to operate efficiently, while avoiding disproportionate legal and compliance risks.

Furthermore, the asset manager asked the SEC to confirm that tokenized versions of conventional securities should enjoy full regulatory parity with their underlying instruments. Such a position, it said, would reduce friction between blockchain-based and traditional markets and help align pricing, liquidity, and reporting.

Fidelity also noted that clear tokenized securities regulation would help broker-dealers structure products and services without constantly seeking bespoke exemptive relief. However, the company emphasized that parity should not mean new or additional capital penalties simply because assets move onto a blockchain.

Centralized and decentralized platforms under one framework

Roberto Braceras, Fidelity’s general counsel, urged the SEC to consider frameworks that can accommodate both centralized and decentralized trading venues. He argued that regulatory policy should recognize the distinct operational models of traditional exchanges and decentralized protocols while still protecting investors.

Decentralized finance platforms typically lack the centralized governance and control structures that underpin classic exchange models. As a result, Fidelity contended that applying conventional exchange reporting obligations to these systems can create disproportionate compliance burdens and may even be technologically infeasible.

The firm suggested that regulators focus on functional outcomes—such as transparency, fair access, and market integrity—rather than attempting to retrofit every decentralized protocol into existing exchange categories. Moreover, Fidelity highlighted that tailored oversight could encourage responsible innovation instead of pushing projects offshore.

In this context, the company reiterated that any new approach to decentralized finance compliance should still align with the core investor protection principles embedded in U.S. securities law. However, it argued that rigid, one-size-fits-all rules would undermine both innovation and enforcement.

Blockchain recordkeeping and market infrastructure

Beyond trading and custody, Fidelity asked the SEC to explicitly allow broker-dealers to use blockchain networks for regulatory recordkeeping. The firm wants assurance that storing trade and position data on-chain, and relying on blockchain for settlement, will not automatically classify these firms as clearing agencies.

According to Fidelity, modernizing blockchain recordkeeping requirements could increase transparency, reduce reconciliation errors, and support near-real-time oversight. Moreover, it argued that permitting on-chain records within existing regulatory categories would lower operational risk without eroding regulatory objectives.

The firm also pointed out that allowing broker-dealers to deploy distributed ledger technology in their back-office workflows could support continuous or extended-hours market operations. However, Fidelity maintained that such innovations should not trigger duplicative licensing or capital standards solely because of the technology involved.

Federal banking capital guidance on tokenization

Fidelity’s appeal arrived against the backdrop of important federal banking guidance issued earlier. In March, three U.S. banking regulators released a joint statement on the treatment of tokenized assets in prudential frameworks.

The Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency declared that tokenized securities are subject to capital requirements identical to the assets they represent. Moreover, the agencies clarified that the technology used for issuance or trading does not alter capital classification.

This coordinated position from banking supervisors reinforced Fidelity’s argument that regulation should focus on underlying risk, not on whether an asset is represented through a blockchain token. The firm suggested that consistent federal banking capital guidance across agencies would help reduce regulatory arbitrage and confusion for market participants.

Commissioner Peirce has repeatedly encouraged institutions working on tokenization and digital asset strategies to maintain direct engagement with regulators. That stance, Fidelity noted, contrasts with earlier eras when enforcement actions often served as the primary policy signal for the crypto sector.

Implications of Fidelity’s SEC appeal for crypto policy

The asset manager’s submission frames fidelity crypto regulation as part of a broader effort to integrate blockchain technology into mainstream capital markets. By targeting rules for broker-dealers, ATS platforms, custody, and recordkeeping, Fidelity aims to reduce operational and legal uncertainty.

Moreover, the letter underscores the growing expectation that the SEC will move beyond case-by-case enforcement toward a more transparent rulemaking process for digital assets. If the agency adopts even part of Fidelity’s roadmap, market participants could gain clearer paths for launching tokenized products, upgrading infrastructure, and scaling digital asset services.

In summary, Fidelity’s appeal to the SEC highlights a pivotal moment in the alignment of U.S. securities law with blockchain innovation. While regulators have begun to clarify discrete issues like custody and capital treatment, industry leaders are now pressing for cohesive frameworks that can support both traditional and on-chain finance.