Fidelity Urges SEC Crypto Task Force to Clarify On-Chain Settlement Rules

• Stacey George
• March 22, 2026
• Policy
• 0 Comments

Fidelity Investments is pushing for clearer rules on how digital assets settle on-chain, joining the SEC Crypto Task Force’s tokenization roundtable as the agency examines whether existing securities frameworks can accommodate blockchain-native market infrastructure.

The asset management giant, which oversees trillions in client assets, participated directly in the SEC’s May 12, 2025 roundtable titled “Tokenization: Moving Assets Onchain: Where TradFi and DeFi Meet.” Cynthia Lo Bessette, Fidelity’s head of digital assets, sat on the “Evolution of Finance: Capital Markets 2.0” panel, where discussion centered on whether the full securities lifecycle, including issuance, trading, clearing, and settlement, should move on-chain.

The roundtable came weeks after Fidelity filed a preliminary prospectus with the SEC for its Treasury Digital Fund OnChain share class on March 21, 2025. That filing proposed recording ownership of the OnChain class on a public blockchain as a secondary ledger, while the transfer agent would maintain the official book-entry ownership record.

Why Fidelity Wants SEC Clarity on On-Chain Settlement

On-chain settlement refers to the process of finalizing securities transactions directly on a blockchain rather than through traditional clearinghouses and depositories. For institutional firms like Fidelity, ambiguity around how regulators treat this process creates compliance risk that limits adoption.

Lo Bessette highlighted the potential for 24/7 transfers and more efficient capital management during the roundtable. She also voiced support for regulatory sandboxes, safe harbors, and pilot programs that would let firms experiment with on-chain finance under controlled conditions.

“We see promise in tokenization and its ability to be transformative to the financial services industry by driving transactional efficiencies with access and allocation of capital across markets,” Lo Bessette has said publicly about Fidelity’s position on tokenized assets.

The SEC’s own framing of the event signaled that settlement is a live regulatory question. The agency’s roundtable announcement featured remarks from Commissioner Hester Peirce, who called tokenization “a technological development that could substantially change many aspects of our financial markets.”

Commissioner Mark Uyeda went further, stating that tokenization implicates issuance, trading, transfer, settlement, and record of ownership, and that market participants should not be left guessing about how to comply. That language suggests the SEC recognizes the regulatory gap Fidelity and other institutional players are navigating, a gap that also affects how traditional asset classes interact with digital infrastructure.

What On-Chain Settlement Could Change for Crypto Markets

If the SEC provides clear guidance on on-chain settlement, it would directly affect how brokers, custodians, and asset managers structure their digital asset operations. Currently, firms must navigate overlapping and sometimes contradictory rules around custody, transfer, and finality.

Fidelity’s OnChain filing illustrates the practical complexity. The fund structure uses a traditional transfer agent for official ownership records while simultaneously recording those records on a public blockchain. This dual-ledger approach is a workaround for regulatory uncertainty, not a long-term architecture.

Institutional Adoption Hinges on Compliance Boundaries

Large financial firms will not scale blockchain-based products without clear compliance boundaries. The questions are specific: does a blockchain record constitute legal settlement? Can a smart contract serve as a transfer agent? What happens when on-chain and off-chain records conflict?

These are not hypothetical concerns. Fidelity’s filing explicitly addresses the transfer agent question, and the SEC’s roundtable discussion raised whether tokenization would cover downstream distribution, trading, clearing, and settlement across the full securities lifecycle.

The potential benefits are well documented: faster settlement cycles, reduced counterparty risk, greater transparency in ownership records, and lower operational costs. But none of these benefits materialize at institutional scale without regulatory certainty, a dynamic similar to how major financial firms approach other emerging technology shifts where policy lags innovation.

What the SEC Crypto Task Force May Need to Address Next

The May 12 roundtable was part of a broader series of public sessions the SEC Crypto Task Force held in spring 2025. The existence of the series signals active regulatory review, but it does not guarantee near-term rulemaking.

Several specific questions remain unresolved. Settlement finality on public blockchains operates differently than in traditional markets, where the DTCC provides a centralized guarantee. Classification is another open issue: if a tokenized Treasury fund settles on-chain, does the token itself become a security subject to additional registration requirements?

Pending Regulatory Next Steps

Custody rules are arguably the most consequential unresolved area. The SEC’s existing custody framework was not designed for assets that exist natively on a blockchain, and the interaction between qualified custodians and decentralized networks remains legally ambiguous.

Fidelity’s proposed effective date for its OnChain share class was May 30, 2025, suggesting the firm expected at least partial regulatory comfort by that timeline. Whether the SEC moves toward formal guidance, no-action letters, or pilot programs will shape not just Fidelity’s products but the broader institutional approach to digital asset market structure.

The task force’s next moves will likely determine whether on-chain settlement becomes a regulated reality or remains stuck in the dual-ledger compromise that Fidelity’s current filing reflects.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.