TL;DR:
- Ondo Finance asked the SEC for more information before approving Nasdaq’s proposal to settle tokenized securities through DTC.
- Nasdaq argues that tokenization can be implemented without sacrificing investor protections.
- Better Markets warned that tokenization could threaten investor safety if innovation is prioritized over regulation.
Enthusiasm for the tokenization of traditional assets has once again presented the financial industry with a dilemma: how to innovate without sacrificing transparency. This week, Ondo Finance—a leading firm dedicated to bringing real-world assets to blockchain—sent a letter to the U.S. Securities and Exchange Commission (SEC) asking for more clarity before Nasdaq’s proposal to settle “tokenized securities” through the Depository Trust Company (DTC) clearinghouse moves forward.
Tokenization divides Wall Street
In its statement, Ondo Finance argued that “tokenization is ushering in a new era of financial innovation and access,” but cautioned that this process must be carried out through open standards and transparent collaboration. The company asked the regulator to gather more information before making a final decision, highlighting the need to understand how these digital securities would be settled. Nasdaq, for its part, declined to comment.
Ondo manages tokenized versions of money market funds, U.S. government securities, and stocks, and has gained notoriety for its connection to the Trump family-backed World Liberty Financial Project, which acquired ONDO tokens for its strategic reserve.
Interest in bringing stocks and exchange-traded funds (ETFs) to blockchain has grown rapidly. Last month, Nasdaq filed a formal request with the SEC to list tokenized versions of stocks, arguing that the process could be integrated without sacrificing basic protections for investors. The proposal seeks to demonstrate that markets can adopt this technology without resorting to broad exemptions from federal regulations.
The SEC itself has shown interest. Commissioner Hester Peirce said tokenization is a “high priority” for the agency. However, not everyone shares the enthusiasm. Benjamin Schiffrin, director of securities policy at Better Markets, warned that the advancement of this trend could jeopardize investor protection. “It’s not clear that investors need tokenized securities,” he said. “The SEC’s job is to protect them, not to do what the crypto industry wants.”
