Fidelity Pushes SEC to Modernize Crypto Market Infrastructure for Tokenized Finance

Key Highlights

• Fidelity urged the SEC to build clearer rules for crypto trading on regulated systems
• The firm wants broker-dealers to be allowed to custody, trade, and settle digital assets
• It called for updated standards for tokenized securities and real-world assets
• Fidelity also pushed for blockchain-based recordkeeping within traditional market structure
• The proposal aims to integrate crypto into alternative trading systems (ATS)
• Regulators are increasingly considering tokenization as part of mainstream market infrastructure

Fidelity Investments has submitted a formal letter to the U.S. Securities and Exchange Commission urging the regulator to accelerate the development of a full framework for integrating crypto assets into traditional market infrastructure, particularly through regulated trading systems such as alternative trading systems (ATS).

The letter was sent to the SEC Crypto Task Force and responds to its request for industry feedback on how digital assets should be traded within existing financial market structures. Fidelity argued that broker-dealers should be explicitly permitted to offer custody, trading, and settlement services for both crypto assets and tokenized securities under clear regulatory standards.

A central focus of the proposal is tokenized securities and real-world assets. Fidelity stressed that tokenization models vary significantly depending on structure, meaning investor rights, risk profiles, and valuation methods can differ widely even when assets appear similar on-chain. The firm called for “bright-line” standards so broker-dealers can confidently handle tokenized instruments without ambiguity over their legal classification.

The company also pushed for clearer rules enabling trading of tokenized securities issued by third parties, not just assets created directly by financial institutions. According to Fidelity, this is essential for building liquid secondary markets where blockchain-based financial instruments can trade efficiently under existing regulatory protections.

Another major recommendation involves infrastructure modernization. Fidelity encouraged the SEC to allow distributed ledger technology to be used for recordkeeping and settlement inside regulated financial systems. This would enable blockchain-based infrastructure to operate alongside traditional clearing and settlement processes without being treated as separate or unregulated systems.

The firm also highlighted the growing gap between centralized financial markets and decentralized finance (DeFi) platforms. It argued that current reporting frameworks were designed for intermediated institutions and may not fit decentralized systems that lack a central authority capable of producing standard disclosures. Fidelity suggested regulators update these requirements to reflect how blockchain-based markets actually operate.

Overall, Fidelity’s message reflects a broader shift among major financial institutions: crypto is no longer being treated as a parallel financial system, but as infrastructure that could eventually merge with traditional capital markets. The firm emphasized that existing U.S. market structures are strong enough to support this transition, provided regulators offer clearer guidance.

While the SEC has not yet issued final rules, the growing number of proposals from major asset managers suggests momentum is building toward formal integration of tokenized assets, crypto trading, and blockchain-based settlement systems into regulated financial markets.