Ondo Finance has urged the US Securities and Exchange Commission (SEC) to delay or reject Nasdaq’s proposal to trade tokenized securities, citing concerns over transparency and the potential for established market players to gain an unfair advantage.
In a letter submitted to the regulator on Wednesday, Ondo—a blockchain company that issues tokenized versions of traditional assets—stressed that regulators and investors cannot adequately evaluate Nasdaq’s proposal without public details on how the Depository Trust Company (DTC) will handle blockchain settlements. The DTC serves as the primary depository for US securities and facilitates their post-trade settlement.
While Ondo expressed support for Nasdaq’s move toward tokenization, it warned that “Nasdaq’s reference to non-public information implies differential access that deprives other firms of a fair opportunity to comment.” The company also emphasized that Nasdaq’s rule change cannot take effect until the DTC finalizes its system, noting there is no harm in delaying approval until additional features are released.
Ondo called on the SEC to prioritize “open collaboration and transparent standards” before making a final decision on the proposal.
### Background on Nasdaq’s Proposal
Ondo’s letter responds to Nasdaq’s September 8 filing with the SEC, in which the world’s second-largest stock exchange sought to amend its rules to allow trading in tokenized securities. Tokenized shares are digital versions of traditional stocks recorded on a blockchain.
If approved, the proposal would enable tokenized shares to trade alongside traditional ones, with settlements processed through the DTC’s forthcoming system for tokenized securities. Nasdaq’s proposal was published in the Federal Register on September 22, starting the SEC’s 45-day review period, which runs until early November or late December if extended.
### The Push for Tokenized Stocks
The debate around the tokenization of Nasdaq stocks unfolds against a backdrop of increasing activity in the tokenized equity market. Several platforms have already listed or announced plans to list tokenized versions of US equities.
– **Robinhood** launched a layer-2 blockchain on June 30 to support trading tokenized US stocks and ETFs for European users. The platform plans to list over 200 US equities and funds as on-chain tokens.
– **eToro** intends to introduce tokenized stocks as ERC-20 tokens on Ethereum, including 100 popular US-listed stocks and ETFs available for trading 24/5.
– **Kraken** followed suit by launching a tokenized securities platform in September, offering tokenized shares to eligible customers in Europe.
Industry watchers like Galaxy Digital have warned that this push toward tokenization could threaten the dominance of the New York Stock Exchange. In July, the firm suggested that tokenization challenges the liquidity of traditional markets.
As the SEC deliberates Nasdaq’s proposal, the discussion highlights key questions around transparency, market fairness, and the future interface between traditional financial markets and blockchain-based innovations.
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