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Fidelity Pushes for SEC Rules on Tokenized Asset Trading

#Fidelity Investments submitted a formal letter to the U.S. Securities and Exchange Commission on Friday calling for a broader regulatory framework covering how broker-dealers offer, custody, and trade crypto assets. The letter was addressed to the SEC's Crypto Task Force in response to its open call for public input earlier this month.

Fidelity, the third-largest asset manager in the United States, described it as "critical" for the #SEC to establish clear rules for trading #tokenized securities on alternative trading systems. The company said that the framework must also cover tokenized instruments issued by third-party providers, not only those that a broker-dealer issues itself.

The letter outlined that tokenized real-world assets span a wide range of asset classes. Those include equities, real estate, bonds, and private credit, each with different issuance structures, legal characteristics, and valuation models. In some structures, a token represents the holder's indirect interest in the underlying security through a securities entitlement. In others, it may function as a securities-based swap, which can only be offered to eligible contract participants.

#RobertoBraceras, Fidelity's general counsel, also urged the SEC to address the divide between centralized and decentralized trading venues. The letter asked the agency to consider how intermediated and disintermediated platforms can operate alongside each other under the same regulatory system.

Fidelity flagged a specific problem with existing reporting requirements. #Decentralized finance platforms and other disintermediated systems have no central authority capable of producing the financial disclosures that current SEC rules require. The company recommended that the agency issue guidance allowing broker-dealers to use distributed ledger technology for alternative trading system recordkeeping.