The firm called for bright-line rules for tokenized securities on ATS platforms, advocating standards that let third-party tokenized securities trade without exposing broker-dealers to excessive legal risk.

A joint statement by the Fed, FDIC, and OCC asserted that tokenized securities are subject to the same capital rules as their underlying assets, reinforcing parity in capital treatment.

Four key recommendations were outlined, starting with ongoing regulatory clarity for broker-dealers engaging with crypto assets and including guidance for custody and trading.

The letter noted issuance-structure differences such as securities entitlements and securities-based swaps, arguing these require tailored regulatory treatment.

Fidelity stressed an urgent need for consistent regulatory standards that reflect the variety of tokenized securities and real-world asset-backed tokenized assets.

Fidelity urged the SEC to continue building a clear regulatory framework for broker-dealers to offer, custody, and trade crypto assets on alternative trading systems (ATS) as part of tokenized assets and DeFi guidance, with emphasis on guiding custody, trading, and crypto-security trading pairs.

SEC’s discussions on 24/7 capital markets and prior tokenized-trading experiments were cited as part of a broader move toward flexible, technology-enabled markets.

Fidelity highlighted regulatory gaps between centralized exchanges and DeFi, arguing current requirements misalign with DeFi structures and could impose undue burdens if applied unchanged.

The letter recommended allowing broker-dealers to use blockchain for recordkeeping and clarified that facilitating on-chain settlement should not classify them as clearing agencies.

Tokenized assets should generally retain the same regulatory status as the underlying traditional securities to reduce fragmentation between on-chain and traditional markets.

Regulators reiterated that tokenized and non-tokenized assets should be treated with the same capital rules, underscoring parity across formats.

Fidelity urged consideration of how traditional intermediated markets and blockchain-based venues can coexist, noting benefits like faster settlement but weaker safeguards in some non-traditional venues.