Ondo Finance has requested the U. S. Securities and Exchange Commission (SEC) provide assurance that it will not face enforcement action regarding its Ethereum-based tokenized securities model. In a no-action letter submitted this week, the firm detailed its structure tied to the Ondo Global Markets (OGM) platform, which offers tokenized notes that give non-U. S. investors exposure to U. S.-listed stocks and ETFs.
The model centers on representing "security entitlements" on-chain, while the underlying equities remain held through the Depository Trust Company via U. S. broker-dealer Alpaca. Rather than moving the assets onto blockchain rails, Ondo's approach focuses on digitizing the ownership layer, which the company frames as an operational upgrade rather than a new asset class. Tokens issued on Ethereum would mirror underlying stock entitlements, allowing Ondo to manage collateral and maintain synchronized records without altering the existing custody framework. The custodian Bitgo will hold the relevant securities entitlements in tokenized form on the Ethereum mainnet to support recordkeeping and operational processes.
The SEC has already approved limited steps in this direction, including a rule change allowing Nasdaq to support tokenized share trading. SEC Commissioner Hester Peirce has called on firms exploring tokenization to work directly with the agency, signaling a more iterative approach to oversight. Industry projections suggest tokenized assets could expand into the trillions over the next decade, with estimates ranging from $2 trillion to more than $10 trillion by 2030.
Ondo's proposal highlights a transition in market structure, where blockchain is introduced as a coordination layer rather than a replacement for existing systems. By tokenizing entitlements instead of the underlying securities, firms can integrate with legacy infrastructure while improving efficiency in areas such as collateral tracking and reconciliation. If the SEC grants the no-action letter, other tokenized real-world asset issuers may pursue similar compliance pathways, potentially driving widespread adoption of tokenized equities without the need for new legislation.
