Ondo Finance discusses with SEC about the legal framework for tokenized securities.

Ondo Finance, along with the legal team from Davis Polk & Wardwell, had a meeting with the Crypto Task Force of the Securities and Exchange Commission on April 24 to discuss legal options for tokenizing publicly traded American securities, according to a memorandum reviewed by SEC staff.

The meeting focused on the issuance structures and the legal considerations related to the issuance of securities in the form of tokens, particularly products referencing stocks and U.S. government bonds.

Ondo's presentation addresses several legal challenges such as registration requirements, broker-dealer obligations, market structure regulations, compliance with anti-financial crime regulations, and the application of corporate laws in the states.

The company also proposed structured approaches for the issuance and distribution of tokenized securities in a compliant manner, while mentioning the possibility of participating in the ( regulatory sandbox ) or seeking exemptions on a case-by-case basis.

In addition, Ondo's legal team presented key factors related to investor protection, compliance with anti-money laundering regulations, and how the U.S. Securities Exchange Act can be applied to the token-based issuance model.

Expanding Organizational Standard Tokenization

This initiative is part of a larger strategy by Ondo to bring traditional financial assets onto the blockchain platform. The company is currently managing over 1 billion USD in tokenized assets, accounting for approximately 16.4% of the total 6.15 billion USD in the tokenized U.S. government bonds market.

The Ondo Short-Term US Government Bond Fund (OUSG) is a blockchain fund that simulates returns from short-term US government bonds. This fund is primarily supported by the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) and aims to generate returns while maintaining high liquidity.

Meanwhile, Ondo's USDY is backed by a combination of short-term government bonds and bank deposits. This stablecoin is designed to provide accessibility like conventional stablecoins, especially for investors outside America who want to access yields in USD without going through traditional financial intermediaries.

Both OUSG and USDY represent a rapidly growing asset class in the tokenized finance sector – where blockchain technology is applied to encapsulate and manage traditional financial assets in digital format.

Dialogue with SEC

This meeting is part of a broader effort by the industry to seek clarity in regulatory direction, especially after the leadership changes at the SEC in January.

Since the establishment of the Crypto Task Force on January 21, the SEC has held 81 meetings with key figures in the cryptocurrency industry. The discussions ranged from integrating staking into trading products (ETP) to the impact of market manipulation on centralized platforms.

These moves indicate that the regulatory agency is currently showing a more open attitude towards the cryptocurrency industry under President Donald Trump.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making any decisions. We are not responsible for your investment decisions.

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