U.S.'s first compliant tokenized stock lands, Ondo brings S&P 500 ETF and Micron onto the chain.

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Author: Claude, Deep Tide TechFlow

Deep Tide Insight: On July 2, Ondo Finance announced the tokenization of BlackRock's S&P 500 ETF (IVV) and Micron stock, becoming the first practical application of the "third-party custody model" proposed by the SEC in January this year. The underlying stocks remain within the traditional custody system, and token holders can exercise voting rights through Broadridge. However, the product is not yet open to US investors, and the SEC staff statement does not constitute formal rules.

Tokenized stocks in the US have finally received a regulatory nod.

According to CoinDesk, on July 2, Ondo Finance announced the issuance of tokenized versions of BlackRock's S&P 500 Index ETF (IVV) and Micron Technology (MU) stock on Ethereum. This is the first production deployment of the "third-party custody model" since the SEC issued a staff statement on tokenized securities in January this year, and also the first time a US-listed security has been tokenized by a third party without leaving the country or bypassing offshore structures.

Ondo CEO Ian De Bode stated in the announcement, "Today's milestone shows that we can tokenize securities in a way that satisfies both market and regulatory requirements, serving US and global investors, and laying the foundation for more US investors to enter on-chain investments."

The first batch of targets selected two of the most mainstream assets.

Neither of the two tokenized targets is an obscure asset. IVV is BlackRock's flagship ETF tracking the S&P 500, while Micron is a standout stock in the current memory chip cycle. By using one broad-based ETF and one hot tech stock to validate the new model, Ondo's intention is clear: first prove that "mainstream assets can also be compliantly on-chain."

In terms of the specific structure, the underlying IVV and Micron stocks always remain within the US traditional custody chain, held by regulated custodians. Oasis Pro TA, the SEC-registered transfer agent acquired by Ondo last year, mints corresponding tokens on Ethereum in a 1:1 ratio, with transfer restrictions jointly enforced by participating brokers, transfer agents, and custodians.

According to Ondo, its overseas Global Markets platform has currently tokenized over $1 billion in stocks and ETFs, covering more than 430 securities, ranking first in the industry by total value of tokenized securities. This marks the first time the company has extended its business into the US domestic framework.

Fundamentally different from the model where Robinhood was called out by OpenAI.

For ordinary investors, the real question worth caring about in this release is whether the tokenized stocks purchased actually represent equity.

Last year, this issue caused a stir. After Robinhood launched tokenized products linked to OpenAI shares in Europe, OpenAI publicly stated that it had not authorized the products and warned that these tokens did not represent company equity. Those products belonged to the "synthetic model," where the issuer had no relationship with the underlying company, and investors only received price exposure without shareholder status.

The SEC's staff statement in January provided another path. In the third-party custody model, regulated intermediaries hold the real stocks and then issue on-chain tokens representing the holders' rights. According to The Block, Ondo's product this time is built around this framework, with token holders receiving the same shareholder rights and protections as investors in traditional brokerage accounts, including issuer notifications and on-chain proxy voting.

In terms of holdings, this difference means that under the custody model, the tokens are backed by real stocks with voting rights and information disclosure, while the synthetic model only has a price shadow.

Wall Street legacy infrastructure Broadridge enters to manage voting rights.

Another signal from this release is the deep involvement of traditional financial infrastructure.

Broadridge (NYSE: BR) is a giant in US shareholder communications and proxy voting infrastructure, with much of the shareholder voting for publicly traded companies nationwide running on its ProxyVote.com platform. In this collaboration, Broadridge is responsible for providing proxy voting, regulatory disclosures, and shareholder communication services for Ondo's token holders, who can directly participate in voting on-chain.

Doug DeSchutter, President of Broadridge's Investor Communication Solutions business, stated in the announcement, "By providing proxy voting, issuer communications, and regulatory disclosures for Ondo's token holders, we are fulfilling our commitment to delivering complete, trusted governance capabilities for investors and issuers, regardless of the structure of the assets."

The tokenization track has seen frequent recent activity. On July 1, Robinhood launched its own public blockchain and expanded tokenized stocks beyond Europe. In May, DTCC announced it would bring tokenized assets to the Stellar chain. In March, Nasdaq received SEC approval to conduct tokenized securities trading, and the NYSE has also announced related plans. According to a June report from Citi cited by CoinDesk, the tokenized securities market could reach a size of $5.5 trillion by 2030.

Not yet open to US investors; two risk points to keep in mind.

For readers interested in participating, two things need to be noted.

First, according to CoinDesk, the product is currently not open to US investors. Ondo's move this time is more about verifying the feasibility of the structure, and the actual opening time for US retail investors has not been determined.

Second, the SEC's January statement is a staff statement, representing only the direction of thinking of regulatory personnel, without the force of a formally adopted committee rule. In other words, the compliance status of this model could still be modified by subsequent formal rules.

For ONDO token holders, as of press time, ONDO is trading at approximately $0.33, up about 4% in the past 24 hours. The direct impact of the news on the token price is limited. The medium-term logic depends on when US investors can actually purchase these products and whether the custody model can be extended from two targets to the more than 430 securities on Ondo's overseas platform. Before these two milestones are reached, the significance of this release lies mainly at the regulatory level, not the revenue level.