Fidelity wants clarity from SEC on rules for broker-dealers and crypto assets

As the retail financial advice and securities industry continues to make available to clients nontraditional assets like crypto currencies, some in the industry are still looking for more guidance from the Securities and Exchange Commission about how best to move forward.

For example, Fidelity Investments, the giant brokerage and custodian, on Friday notified the SEC’s Crypto Task Force it wanted more clarity about working with such assets, according to a letter from Roberto Braceras, Fidelity’s general counsel.

Fidelity’s letter had three significant points but focused on the importance for better understanding of rules linked to tokenized securities on alternative trading systems, or trading platforms other than formal securities exchanges.

First, the SEC should continue developing a clear regulatory framework enabling broker‑dealers to custody, trade, and support crypto asset securities, including on alternative trading systems, also known as ATSs, to reduce legal uncertainty and enable compliant market participation, according to the letter.

Next, the SEC should issue brightline standards for tokenized securities, ensuring ATSs can rely on the regulatory status ascribed to a tokenized instrument—critical for avoiding unintended securities‑based swap or unregistered offering violation, according to the letter.

And finally, the SEC should provide regulatory clarity permitting on‑chain recordkeeping and settlement by broker‑dealers without triggering clearing‑agency status, enabling lawful integration of distributed‑ledger processes into securities market infrastructure, according to the letter.

According to crypto news website The Block, 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. 

“The SEC should provide brightline standards that permit ATSs to facilitate secondary market trading in tokenized securities created by third parties,” according to the letter. “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.”

“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,” Fidelity wrote.

Fidelity’s request to the SEC is in line with a series of recent moves by the Commission, according to the report in The Block.

“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,” according to the report.

“Peirce has also repeatedly encouraged firms exploring tokenization to engage directly with regulators, underscoring a more open stance compared to prior enforcement-heavy approaches,” according to the report.