Ondo Files No-Action Request With SEC Over Ethereum Tokenized Equities Model

Ondo Finance has formally asked the U.S. Securities and Exchange Commission not to take enforcement action against a proposed model that would use Ethereum to record and manage securities entitlements linked to U.S. stocks and ETFs. 

The request, submitted Monday as a no-action letter, centers on the firm's Ondo Global Markets (OGM) platform, which already offers non-U.S. investors exposure to U.S.-listed equities through tokenized notes.

What Is Ondo Asking the SEC to Do?

A no-action letter is a request for written confirmation from SEC staff that they would not recommend enforcement action if a company proceeds with a specific activity. It does not create a new rule or set industry-wide precedent. What it does do is give a firm a regulatory green light for a clearly defined, bounded model before going live.

Ondo's request is narrow. It does not ask the SEC to rewrite securities law or approve tokenized securities as a broad category. Instead, it seeks confirmation that Ondo can proceed with one specific operational change: using Ethereum to represent, in tokenized form, certain securities entitlements that underpin its OGM products.

How Would the Model Actually Work?

The OGM platform currently allows non-U.S. investors to access U.S.-listed stocks and ETFs through tokenized notes. The underlying equities are held through the Depository Trust Company (DTC) via Alpaca, a registered U.S. broker-dealer. That custody and legal structure stays in place under the proposed model.

What changes is how certain records are tracked. Ondo would mint tokens on Ethereum Mainnet to represent the relevant securities entitlements. Those tokens would be held by BitGo, acting as custodian, and used to support recordkeeping and operational workflows.

The firm says the goal is operational improvement, not a structural overhaul. Specifically, Ondo cited three expected benefits:

• Cleaner collateral monitoring
• More efficient creation-and-redemption workflows
• Simpler reconciliation within the OGM product stack

The official books and records would remain within the existing legal framework. The Ethereum layer would sit alongside it, not replace it.

Why Use Ethereum Mainnet?

Ondo pointed to a practical reason for choosing Ethereum Mainnet rather than a private or permissioned chain: OGM already operates within Ethereum and Ethereum-compatible environments. Using the same infrastructure reduces friction and keeps the broader system coherent. The firm also noted that public blockchain infrastructure can support regulated markets when the right controls are in place.

What Is a Securities Entitlement, and Why Does It Matter Here?

A securities entitlement is a legal interest a person holds in a financial asset through an intermediary, such as a broker. When you buy stock through a brokerage, you typically hold a securities entitlement rather than the share certificate itself. The DTC sits at the center of this system in the United States, serving as the central securities depository that holds and transfers most publicly traded securities.

Ondo's model does not move the underlying entitlements off the DTC system. It adds a parallel tokenized representation of those entitlements on Ethereum, limited to specific operational use cases like collateral management and reconciliation.

What Does BitGo's Role Mean for the Model?

BitGo is a qualified digital asset custodian. Under the proposed structure, it would hold the Ethereum-based tokens representing the securities entitlements. This keeps the custody function within a supervised, regulated entity, which is central to Ondo's argument that the model fits within the existing legal framework without requiring a change to how securities law works.

Is the SEC Open to Tokenization Right Now?

The current regulatory environment in the United States is more receptive to tokenization than it has been in prior years. Under the Trump administration, regulators have shown a greater willingness to engage with the concept. SEC Commissioner Hester Peirce recently encouraged firms working on tokenized products to approach the agency directly.

Congressional signals have pointed in a similar direction. At a recent House Financial Services Committee hearing, Representative Andy Barr stated that tokenization of securities is coming, while also stressing that investor protections need to be preserved as the market develops.

The SEC has already approved a rule change that would allow Nasdaq to support tokenized share trading. Separately, firms including the New York Stock Exchange, Robinhood, Kraken, and Coinbase have been launching their own onchain equities offerings.

Where Does the Tokenized Asset Market Stand?

Market size projections for tokenized real-world assets vary widely, but analysts broadly expect the sector to scale into the trillions of dollars over the next decade. Estimates for 2030 range from roughly $2 trillion on the conservative end to more than $10 trillion in more optimistic forecasts. The wide range reflects genuine uncertainty about adoption pace, regulatory outcomes, and infrastructure readiness.

Ondo's filing represents one specific use case within a much larger trend of institutions exploring how blockchain infrastructure can improve back-office processes without dismantling the legal frameworks that underpin existing markets.

Conclusion

Ondo's no-action request is a limited but concrete step: it asks the SEC to confirm that a specific, supervised use of Ethereum for recordkeeping within an existing regulated product is acceptable. 

The underlying equities stay with the DTC, custody stays with a qualified custodian, and the legal framework stays intact. The addition is an onchain layer intended to make collateral monitoring, creation-and-redemption workflows, and reconciliation more efficient for OGM investors. The outcome of the request will offer one of the clearest early signals yet of how far U.S. regulators are prepared to let tokenized securities infrastructure develop within the current rulebook.

Resources

1. Blog article by Ondo: Why We Submitted Our SEC No-Action Letter Request

2. Report by The Block: Ondo seeks SEC clearance for tokenized equities model on Ethereum

3. No Action Letter to the US SEC

4. Report by McKinsey & Company: From ripples to waves: The transformational power of tokenizing asset