Fidelity Pushes SEC to Update Crypto Broker-Dealer Rules

• Fidelity says unclear crypto rules block broker-dealers from trading and custody services.
• Tokenised assets create confusion, risking misclassification and potential regulatory violations for firms.
• SEC rules restrict blockchain recordkeeping for broker-dealers, unlike permitted transfer agents today.

Fidelity Investments has a message for the Securities and Exchange Commission: the rules are broken, the industry is ready, and the time for waiting is over.

In a formal letter submitted to the SEC’s Crypto Task Force on March 20, the firm, which manages money for more than 50 million people, laid out four specific problems with how crypto assets are currently regulated and told the agency exactly how to fix them.

Fidelity is essentially telling one of the world’s most powerful financial regulators that it has fallen behind, and that real money, real firms, and real customers are paying the price.

The Core Problem

Right now, broker-dealers — the regulated middlemen that sit at the centre of American financial markets- do not have clear rules for how to buy, hold, or trade crypto assets. That sounds like a minor technical issue. It is not. It means that firms like Fidelity, which operate trading platforms serving millions of clients, cannot fully enter the digital asset market without risking accidental regulatory violations.

“Continued Staff guidance is critical to enable broker-dealers to offer, custody, and trade crypto assets,” Fidelity wrote.

The Tokenisation Trap

Things get more complicated when traditional assets like stocks and bonds are moved onto a blockchain, a process called tokenisation. When that happens, nobody can say for certain whether the resulting product is still a regular security or something else entirely. Getting that classification wrong could mean accidentally selling a restricted financial product to someone who is not legally allowed to buy it.

Fidelity wants the SEC to publish clear rules so that trading platforms know exactly what they are dealing with before they execute a single trade.

The Recordkeeping Gap 

Here is the detail that stands out most. SEC rules currently do not allow broker-dealers to keep their records on a blockchain, even though another type of financial firm, called a transfer agent, has already been permitted to do exactly that. Fidelity called this inconsistency out directly and asked the SEC to fix it immediately.

Why This Matters

SEC Chair Paul Atkins has already acknowledged that bringing crypto into mainstream finance “will require the SEC to consider targeted updates to its existing rules.” Fidelity’s letter is a detailed list of what those updates should be, written by a firm with 13,500 financial partners waiting for the answer.