Securities Tokenization Regulation Breakthrough: Ondo Seeks SEC Tolerance, Will Ethereum Mainnet Become a New RWA Hub?

On April 13, 2026, Ondo Finance submitted a request for a no-action letter to the U.S. Securities and Exchange Commission regarding its Ondo Global Markets (OGM) product, seeking regulatory confirmation that recording certain security interests in tokenized form on the Ethereum mainnet under specific models would not trigger enforcement risks. This move occurs against the macro backdrop of a broader rise in the RWA (Real-World Asset) sector, driven by evolving regulatory frameworks, expanding tokenized asset scales, and accelerated entry of traditional financial institutions.

What changes have occurred in the regulatory framework for RWA tokenization?

To understand the strategic significance of Ondo’s application, it is necessary to trace the substantive shifts in the U.S. regulatory environment since 2026. On January 28, 2026, the SEC’s Divisions of Corporation Finance, Investment Management, and Trading & Markets jointly issued the “Tokenized Securities Statement,” clarifying that tokenized securities remain within the scope of traditional securities under the law. The federal securities laws’ disclosure, registration, and investor protection requirements are not waived due to changes in technological medium. This statement provides market participants with operational guidance on how existing securities laws apply to tokenized securities, signaling a shift from “enforcement regulation” to a “rule-first” governance model.

Subsequently, on March 17, 2026, the SEC and CFTC jointly released a 68-page interpretive document systematically categorizing crypto assets into five major types, with “digital securities”—i.e., tokenized securities—explicitly classified as securities subject to SEC regulation. This classification system offers a long-missing compliance reference point for protocols like Ondo. In the same month, the SEC officially approved Nasdaq’s proposed amendments to securities tokenization trading rules, allowing components of the Russell 1000 index and major ETFs to be traded and settled on exchanges via blockchain tokens, marking the transition of tokenized securities from proof-of-concept to mainstream compliant market.

These regulatory developments collectively form the institutional basis for Ondo’s current no-action request. During this transitional phase, where rules are gradually clarified but specific operational pathways still require case-by-case confirmation, seeking a SEC no-action letter is a cautious and pragmatic compliance strategy.

What are the specific contents and strategic logic behind Ondo’s request for regulatory tacit approval?

According to Ondo’s official blog, the scope of this no-action letter request is strictly limited. Ondo does not ask the SEC to rewrite securities laws or fully approve all types of tokenized securities. Instead, it seeks a narrow confirmation: that the operational model of recording security interests in tokenized form on the Ethereum mainnet will not provoke SEC enforcement actions.

The specific mechanism is as follows: Oasis Pro TA is responsible for minting tokens representing security interests on the Ethereum mainnet, with these tokens held in custody by BitGo in designated wallets, while Alpaca Securities maintains traditional off-chain ledgers and records. It is important to emphasize that on-chain tokens do not directly represent ownership of underlying stocks but are records of security interests held through DTC—i.e., a tokenized expression of beneficial interests. Ondo chose Ethereum as the recording layer because the OGM product already operates within Ethereum and compatible environments, and maintaining a consistent tech stack helps reduce systemic friction.

Strategically, Ondo’s approach exhibits three key features. First, it clearly defines “operational layer optimization” rather than “market structure overhaul,” attempting to package innovation within acceptable boundaries of existing compliance frameworks. Second, it directly cites the SEC’s December 11, 2025 approval of DTC’s pilot program for tokenized security interest recording, forming an analogy: “DTC can do it, market participants can do it too.” Third, obtaining regulatory confirmation via a no-action letter rather than formal rulemaking avoids lengthy legislative procedures, representing a pragmatic and efficient path.

How has the overall scale and capital flow structure of the RWA market changed?

The clarifying regulatory environment and the actual growth of the RWA market have created a reinforcing positive cycle. As of April 2026, the global tokenized real-world asset market exceeded $33.5 billion, a significant expansion from about $12 billion at the start of 2025. Tokenized U.S. Treasuries account for roughly 45% of this, with a scale of $11.3 billion, while tokenized stocks have surpassed $1.07 billion.

In the tokenized stock segment, Ondo’s market position is particularly prominent. According to RWA.xyz data, Ondo holds over 61% of the tokenized stock market, with a total trading volume exceeding $12.7 billion and 82.9k holders. On a broader macro level, asset categories in the RWA market are evolving from a focus on U.S. Treasuries to diversification, including corporate bonds, private credit, and institutional alternative investment funds, each surpassing $1 billion in scale, with market concentration decreasing by about 61% over the past year.

Meanwhile, traditional financial institutions are accelerating their entry. BlackRock’s BUIDL tokenization fund has grown to approximately $2.85 billion, and JPMorgan is scaling its blockchain division Kinexys for broader application. These signs indicate that RWA tokenization is shifting from “crypto-native experimentation” toward becoming a component of mainstream financial infrastructure.

If the SEC approves the no-action letter, what exemplary effects could it produce for the industry?

The SEC’s final stance on Ondo’s application will largely influence the compliance pathways for the entire RWA sector. If approved, it could generate at least three levels of exemplary effects.

From a regulatory precedent perspective, this would provide other RWA protocols with a reference compliance operation template. Ondo’s core design—“off-chain bookkeeping + on-chain record support”—features a dual-layer architecture: official ledgers remain within traditional custodial systems, with blockchain serving as an auxiliary record and operational layer. This design, which does not infringe on core securities law constraints, enhances operational efficiency through blockchain technology and is highly replicable.

From an infrastructure development perspective, Ethereum’s role as a securities-grade recording layer would be endorsed by regulators. Currently, Ethereum hosts about 57% of tokenized RWA activity, with approximately 169k holders. Clarified regulatory acceptance could further accelerate institutional capital inflows into the Ethereum ecosystem, promoting its evolution from DeFi infrastructure to broader financial record-keeping infrastructure.

From a market structure evolution standpoint, the integration channels between tokenized securities and traditional securities will become smoother. With Nasdaq’s approved tokenization trading framework and potential regulatory confirmation of DTC pilot programs and market participant applications like Ondo, tokenized securities could move from “single-exchange pilot” to “full-chain compliant operation,” removing systemic barriers for a wider range of asset classes to be tokenized.

What are the core challenges and potential risks faced by the development of tokenized securities?

Despite the increasingly clear regulatory framework, large-scale development of tokenized securities still faces multiple challenges. From a compliance execution perspective, implementing KYC and AML rules on public blockchains remains a key concern for regulators. Nasdaq’s approved plan involves permissioned blockchains for collecting KYC data at the protocol layer, while Ondo’s approach relies on traditional custodians maintaining official ledgers—this design itself is a proactive response to compliance constraints.

From an economic model perspective, the decoupling of infrastructure growth and token value warrants attention. For example, despite ONDO tokens reaching a record TVL of $16B in early April 2026 and annualized fee income of about $48.95 million, the ONDO token price has fallen over 80% from its historical high of $2.14, with protocol and holder income at zero. As of April 14, 2026, Gate.io data shows ONDO at approximately $0.2532. This value capture gap reflects that current RWA protocols’ economic models are still in exploration, and ecosystem expansion has not yet translated into direct benefits for token holders.

Additionally, cross-jurisdictional regulatory coordination remains a long-term challenge. On February 6, 2026, China’s central bank and seven other departments jointly issued a notice reaffirming the “strictly prohibited domestically, tightly regulated abroad” principle for RWA regulation, while the CSRC has opened limited compliant channels for offshore issuance of ABS tokens. Divergent regulatory approaches across countries mean that any compliant RWA protocol must have cross-border adaptability.

Summary

Ondo Finance’s submission of a no-action letter request to the SEC is a landmark compliance exploration event amid the gradual improvement of the regulatory framework for RWA. From a macro perspective, the tokenized RWA market surpassed $30 billion in 2026, with continuous institutional capital inflows, increasing asset class diversity, and a shift from ambiguity to clarity in regulation. From a micro perspective, Ondo’s approach of “off-chain bookkeeping + on-chain record support” seeks SEC confirmation, respecting existing compliance frameworks while pragmatically enhancing operational efficiency. However, large-scale development of tokenized securities still faces challenges such as KYC/AML enforcement, cross-border regulatory coordination, and economic model design. The SEC’s final response to this application will serve as an important indicator of the U.S. regulator’s attitude toward tokenized securities and will profoundly influence the future development path of the RWA sector.

FAQ

Q: What is a SEC no-action letter?

A: A no-action letter from SEC staff is an informal letter indicating that the SEC staff will not take enforcement action against a specific business model or operation. It is not legally binding but is often regarded by market participants as an important regulatory confirmation.

Q: How does Ondo’s proposed scheme differ fundamentally from traditional securities custody?

A: Traditional securities ownership records are maintained entirely by centralized custodians. Ondo’s scheme maintains a traditional off-chain ledger while adding a layer of tokenized security interests on the Ethereum mainnet to support collateral monitoring, redemption processes, and reconciliation efficiency.

Q: Is a tokenized security equivalent to ownership of the underlying asset?

A: Not necessarily. In a custodial tokenized model, tokens usually represent beneficial interests in the underlying securities rather than direct ownership. The underlying securities are still held through traditional custodial chains, and the rights of token holders depend on specific product design.

Q: What are the main asset categories currently in the RWA tokenization market?

A: As of April 2026, main asset categories include tokenized U.S. Treasuries (about $11.3 billion), commodities (about $6.5 billion), tokenized stocks (about $1.07 billion), as well as emerging categories like private credit and corporate bonds.

Q: Why has the ONDO token price decoupled from platform growth?

A: Primarily because ONDO tokens currently lack a direct economic link to platform revenue—protocol and holder income are zero. Funds are more directly flowing into tokenized stocks and other underlying assets rather than the platform token, leading to a gap between ecosystem expansion and token value.