Ondo Finance and legal counsel from Davis Polk & Wardwell recently met with the US Securities and Exchange Commission’s Crypto Task Force to discuss regulatory pathways for tokenized versions of publicly traded US securities. The discussions, outlined in a memorandum reviewed by the agency’s staff, focused on structuring options and regulatory considerations for issuing tokenized securities referencing assets such as US equities and fixed-income instruments.
Topics of discussion included regulatory challenges such as registration requirements, broker-dealer obligations, market structure rules, financial crimes compliance, and the application of state corporate laws. Ondo proposed exploring structuring approaches to ensure compliant issuance and distribution of tokenized securities, with a potential for participating in a regulatory sandbox or seeking targeted relief.
Ondo Finance has been actively working towards integrating traditional financial assets into blockchain-native environments. With over $1 billion in tokenized products under management, the firm represents a significant portion of the tokenized US Treasuries market. The Ondo Short-Term US Government Bond Fund (OUSG) offers exposure to short-term US Treasuries through a blockchain-based fund, while the US Dollar Yield Token (USDY) provides non-US investors with access to US dollar-denominated returns without traditional financial intermediaries.
These products highlight the growing trend of tokenizing real-world securities using blockchain infrastructure, creating a digitally native format for managing assets. The recent engagement with the SEC is part of a broader industry effort to seek clarity on regulatory guidelines, particularly since the leadership change at the SEC in January.
Since the establishment of the Crypto Task Force, the SEC has held numerous meetings with key figures in the crypto industry, signaling a more open approach to engaging with the sector under the current administration. Discussions have covered topics such as implementing staking in exchange-traded products and addressing market manipulation on centralized platforms.
Overall, Ondo Finance’s proactive engagement with regulatory authorities reflects the industry’s commitment to navigating the evolving landscape of tokenized securities and blockchain-based financial products.