Ondo Finance submitted a no-action letter request to the U.S. Securities and Exchange Commission (SEC). The filing seeks SEC staff assurance that it would not recommend enforcement action if Ondo uses Ethereum Mainnet to record and administer certain securities entitlements in tokenized form, while keeping the official legal books, records, custody, and underlying ownership unchanged.
What Ondo wants to do: For its OGM product; tokenized notes giving non-U.S. investors exposure to over 200 U.S.-listed stocks and ETFs, Ondo proposes representing securities entitlements; interests in the underlying assets as tokens on Ethereum. The actual underlying securities would continue to be held and custodied traditionally via BitGo and a U.S. broker-dealer like Alpaca, with records potentially tied to systems like DTC.
Ethereum would serve mainly as an operational layer for recordkeeping, collateral management, and faster synchronization—not as a replacement for legal ownership or the primary ledger. This is narrowly tailored to OGM and does not seek broad changes to securities laws, new broker-dealer registration requirements, or permission for fully on-chain securities settlement.
It frames blockchain as an efficiency tool that coexists with existing regulated infrastructure. Ondo argues the model maintains full compliance with custody, disclosure, and recordkeeping rules. It could enable benefits like near-instant settlement, 24/7 operations, and improved collateral handling without introducing new regulatory risks. This comes shortly after the SEC closed a two-year investigation into Ondo without charges.
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Ondo has previously submitted comments to the SEC advocating for tokenized securities frameworks, including support for public blockchains in RWA markets. A favorable no-action letter (if granted) would not be binding law or a formal rule, but it would provide regulatory comfort and a precedent that public, permissionless blockchains like Ethereum can integrate into U.S. securities recordkeeping without triggering enforcement.
It is often described as potentially the first formal regulatory confirmationn of this kind for tokenized equities exposure. The broader tokenized real-world assets (RWA) sector currently around $20–25B in TVL, with Ondo holding a significant share could benefit. Success here might encourage other issuers to pursue similar compliant hybrid models combining TradFi custody with blockchain efficiency.
It aligns with growing institutional interest in RWAs, where tokenization aims to improve liquidity, accessibility, and settlement speed while respecting existing regulations. No-action letters can be modified or withdrawn, and the SEC has not yet responded publicly. The request is available via Ondo’s blog and SEC-related submissions.
This is a notable step in bridging traditional securities infrastructure with blockchain for RWAs, particularly for non-U.S. investor access to U.S. equities and ETFs. Developments will likely depend on the SEC’s stance under current leadership.
If granted, this would provide the first formal SEC staff comfort that a permissionless blockchain can be integrated into U.S. securities recordkeeping as an operational layer, without replacing legal ownership, custody, or official books. It signals a hybrid model (TradFi custody + blockchain efficiency) is viable, reducing uncertainty for similar tokenized setups.
Enables faster near-instant settlement, 24/7 operations, improved collateral monitoring, and streamlined subscription and redemption processes for non-U.S. investors gaining exposure to 200+ U.S. stocks and ETFs. The underlying assets remain held traditionally via BitGo and broker-dealers, keeping full regulatory compliance intact.
Boosts confidence in tokenized real-world assets. It could accelerate institutional adoption by demonstrating compliant ways to use public chains for efficiency gains, potentially unlocking more capital flows into RWAs without overhauling securities laws. The tokenized securities market is projected to see significant growth in coming years.
Viewed as a flow catalyst post-SEC investigation closure. It has generated positive buzz in crypto communities, highlighting Ondo’s leadership in institutional tokenization and potential for broader RWA expansion. Short-term price reaction has been modest (ONDO up ~2-3% in initial reports), but longer-term implications could support growth if approved.