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 focused on structuring options and regulatory considerations for issuing tokenized securities, specifically those referencing assets like US equities and fixed-income instruments. Ondo’s presentation addressed various regulatory challenges, including registration requirements, broker-dealer obligations, and market structure rules, proposing structuring approaches for compliant issuance and distribution of tokenized securities.
Ondo’s legal team also emphasized key considerations around investor protection, anti-money laundering compliance, and the application of the Exchange Act to token-based issuance models. This initiative is part of Ondo’s broader efforts to integrate traditional financial assets into blockchain-native environments, as the firm currently manages over $1 billion in tokenized products, representing a significant portion of the tokenized US Treasuries market. The Ondo Short-Term US Government Bond Fund and the US Dollar Yield Token are examples of products that aim to deliver yield and provide exposure to US dollar-denominated returns for non-US investors without traditional financial intermediaries.
The meeting with the SEC signifies a growing industry effort to seek regulatory clarity, particularly since the establishment of the SEC’s Crypto Task Force in January. With 81 meetings held with key figures from the crypto industry, the regulator is showing a willingness to engage and discuss various topics, including staking in exchange-traded products and market manipulation on centralized platforms. These developments highlight a shift in the SEC’s approach towards the crypto industry under the current administration.
Overall, the engagement between Ondo Finance, Davis Polk & Wardwell, and the SEC’s Crypto Task Force underscores the importance of regulatory compliance and investor protection in the tokenized securities space. By addressing regulatory challenges and proposing structuring approaches, Ondo is paving the way for the compliant issuance and distribution of tokenized assets, further expanding the institutional-grade tokenization market. The SEC’s willingness to engage with industry stakeholders signifies a positive step towards a more transparent and regulated crypto environment under the current administration.
