Ondo Finance, a blockchain company focused on tokenizing traditional financial assets, has called on the SEC to pause Nasdaq’s tokenization initiative. The company argues that regulators and investors cannot fully evaluate the plan without public details on how the Depository Trust Company (DTC) — the primary depository for U.S. securities will manage blockchain settlement. Ondo supports Nasdaq’s efforts to modernize markets, but says the process must be transparent and inclusive. “Nasdaq’s reliance on non-public information implies differential access that deprives other firms of a fair opportunity to express their views,” the company warned in a letter to the SEC. The firm also noted that Nasdaq’s rule cannot take effect until DTC finishes developing its new settlement system, adding that there is no risk in delaying approval until more details are disclosed. Ondo urged the SEC to prioritize open standards that give all market participants equal footing. Nasdaq’s Proposal and Growing Competition in Tokenized Markets On September 8, Nasdaq filed its application to allow tokenized securities to trade alongside traditional stocks, with settlement handled through DTC’s upcoming blockchain-based infrastructure. The proposal entered a 45-day SEC review window on September 22, which could be extended into December. Meanwhile, competition around tokenized securities is accelerating: On June 30, Robinhood launched a Layer-2 blockchain to support trading of tokenized U.S. stocks and ETFs for European users. The platform announced that it will offer more than 200 U.S. securities as on-chain tokens. Trading platform eToro also revealed plans to launch tokenized stocks as ERC-20 tokens on Ethereum. The company stated that the rollout will include 100 popular U.S.-listed stocks and ETFs, available for trading 24/5. Kraken is following the same trend. The crypto exchange launched its tokenized securities platform in September, making tokenized shares available to its clients in Europe. A Turning Point for Wall Street? Galaxy Digital recently warned that tokenization could eventually threaten the dominance of legacy exchanges like the New York Stock Exchange by shifting liquidity to blockchain-based platforms. Nasdaq’s proposal and the SEC’s coming decision may now be a crucial test of how fast traditional markets will modernize.
