Ondo seeks SEC clearance for tokenized equities model on Ethereum

Real-world asset tokenization firm Ondo Finance is looking to the Securities and Exchange Commission for confirmation that it would not pursue enforcement over a proposed model using Ethereum "for recording and administering certain securities entitlements in tokenized form."

In a no-action letter request submitted on Monday, the firm outlined a model tied to its Ondo Global Markets platform, which offers "tokenized notes that give non-U.S. investors exposure to U.S.-listed stocks and ETFs."

The request focuses on Ondo’s “security entitlements” tied to equities, which would be represented onchain, while the underlying stocks and ETFs remain held through the Depository Trust Company via U.S. broker-dealer Alpaca.

The biggest change to Ondo's existing model is how everything would be tracked. Ondo would create tokens on Ethereum that represent its underlying stock entitlements to help manage collateral and keep records in sync.

Tokenization-friendly rulemaking

U.S. regulators under the Trump administration are showing an openness to tokenization. 

SEC Commissioner Hester Peirce even recently encouraged firms exploring tokenized products to engage directly with the agency. At the same time, lawmakers are working on ways to fine-tune regulations that would bring securities onchain.

Echoing that, during a recent House Financial Services Committee hearing, Rep. Andy Barr said “no doubt tokenization of securities is coming,” while emphasizing the need to preserve investor protections as the market takes shape.

The SEC has already given the green light to a handful of tokenization efforts to move forward, including approving a rule change enabling Nasdaq to support tokenized share trading, as firms like the New York Stock Exchange, Robinhood, Kraken, and Coinbase, among others, are launching onchain equities offerings.

Estimates for the sector vary, but analysts generally expect tokenized assets to grow into the trillions of dollars over the next decade, with projections ranging from roughly $2 trillion to more than $10 trillion by 2030.

The Block’s data shows the tokenized real-world asset market currently sits at roughly $23 billion, with Ondo accounting for about $2.8 billion.