Ondo Finance Seeks SEC No-Action Relief on Ethereum-Based Securities Tokenization

Ondo Finance, a real-world asset tokenization platform, has asked the U.S. Securities and Exchange Commission for regulatory guidance on a securities tokenization structure built on Ethereum.

The Block reported on June 13 that Ondo Finance had submitted a no-action letter to the SEC. A no-action letter is a request for advance confirmation that the regulator will not take enforcement action against a specific business model or activity, even if it could raise securities-law issues.

The request is tied to Ondo Global Markets, the company's platform for tokenized products. The platform offers non-U.S. investors exposure to U.S.-listed stocks and exchange-traded funds.

Ondo Finance plans to keep the underlying stocks and ETF assets in traditional custody through the Depository Trust Company, or DTC, with administration handled by Alpaca, a U.S. broker-dealer. Instead, it proposed issuing investors' rights, known as security entitlements, as tokens on Ethereum for collateral management and recordkeeping.

Under that structure, the underlying assets would remain within the existing financial system, while rights and transaction records would move on-chain. Ondo Finance said the model could improve efficiency and transparency in asset management.