- Ondo Finance met with the SEC to propose a framework for tokenizing U.S. securities.
- The firm pushed for sandbox models to support innovation and compliance.
- The SEC will hold a public crypto custody roundtable on April 25.
Ondo Finance recently held a meeting with the U.S. Securities and Exchange Commission’s Crypto Asset Working Group, where the firm outlined a proposed regulatory framework for the tokenization of publicly traded U.S. securities.
Davis Polk & Wardwell Lawyers also attended the meeting, as described in an SEC memo. The meeting focused on whether existing financial regulations now apply to the wrapped tokenized securities operating on such networks, which could also be considered derivative products.
As the SEC noted, Ondo Finance outlined the architecture of the tokenized securities it intended to build. The presentation illustrated key regulatory issues, such as securities registration, broker-dealer obligations, market oversight, and compliance with state corporate law.
Ondo Leadership Advocates Regulatory-Compliant Tokenization Path
The company also considered whether or not there was room to develop sandbox frameworks or regulatory relief mechanisms to assist the facilitation of innovation while upholding investor protection standards.
Ondo‘s executive team, including CEO Nathan Allman and Chief Strategy Officer Ian De Bode, advocated for a compliant route that would enable tokenized versions of traditional financial instruments to operate within current U.S. regulatory frameworks, in conjunction with legal counsel.
Among the proposed models were a wide variety of models explaining how tokenization might be carried out, particularly resolving the longstanding legal uncertainties concerning the entry of crypto asset issuers into the market.
SEC Roundtable on Crypto Custody Set for April 25
In another related effort, the SEC will host a “Crypto Task Force Roundtable” on April 25 in Washington, D.C., to discuss how to address pressing questions of crypto custody.
The roundtable will consist of two panel discussions, representing (i) custody by broker-dealers and (ii) custody by investment advisers and registered investment companies.
Executives from leading firms, such as Fireblocks, Anchorage, Kraken, and BitGo, and academic voices from Georgetown University and the University of Pennsylvania are all expected to participate.
