- Ondo seeks SEC confirmation for Ethereum-based securities recordkeeping without legal changes.
- Proposal keeps custody and ownership off-chain while adding blockchain for operations.
- SEC response could shape how tokenized securities fit within existing frameworks.
Ondo Finance has formally asked the U.S. Securities and Exchange Commission to confirm whether a proposed blockchain-based framework tied to its Global Markets platform would avoid enforcement action, marking a direct attempt to clarify how tokenized securities can operate within existing regulations.
The request, submitted as a no-action letter, outlines a model in which certain securities entitlements would be represented on the Ethereum network while maintaining the current legal, custody, and recordkeeping structures. The filing focuses on whether this limited on-chain layer can coexist with established safeguards without requiring changes to securities law.
Tokenized Recordkeeping Within Existing Framework
According to the submission, Ondo’s Global Markets products would continue offering tokenized notes that provide non-U.S. investors with exposure to U.S.-listed stocks and exchange-traded funds. The underlying assets would remain held through the Depository Trust Company via U.S. broker-dealer Alpaca, preserving the traditional custody structure.
The proposed adjustment centers on recordkeeping. Ondo plans to issue tokens on Ethereum representing securities entitlements, which would be held by custodian BitGo. These tokens would not replace official ownership records but would operate alongside them to support internal processes such as collateral monitoring, reconciliation, and creation and redemption workflows.
The company stated that the objective is to improve operational efficiency rather than alter the legal nature of its products. Official books and records would remain within the existing system, while the blockchain layer would serve as a supplementary tool.
Related: Crypto Gets Clarity as SEC, CFTC Say Most Tokens Aren’t Securities
Regulatory Context and Industry Implications
The no-action request seeks confirmation that SEC staff would not recommend enforcement if the model is implemented as described. Such a response would not constitute a formal rule but could allow the specific structure to proceed without additional regulatory changes.
The filing comes as U.S. regulators and lawmakers continue examining how tokenization may fit within current financial systems. SEC Commissioner Hester Peirce has previously encouraged firms to engage with the agency on tokenized products, while discussions in Congress have highlighted the need to maintain investor protections as blockchain-based securities models develop.
Recent findings show increasing activity in the sector. The SEC has approved a rule change enabling Nasdaq to support tokenized share trading, and multiple firms, including exchanges and broker platforms, are introducing on-chain equity-related offerings.
Related:Bitget Expands Spot Market With Ondo Tokenized Stocks, ETFs, and Commodities
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