Ondo Finance has urged the US Securities and Exchange Commission (SEC) to delay or reject NASDAQ’s proposal to exchange tokenized securities, saying it lacks transparency and could give established market players an unfair edge.
On a Wednesday Letter At the Regulator, Ondo – a blockchain company that issues tokenized versions of traditional assets – said regulators and investors would not be fair to review NASDAQ’s proposal without public details on how the Depository Trust Company (DTC) will handle blockchain settlements. DTC serves as the primary depository for US securities and facilitates their post-trade settlement.
While acknowledging the support of Nasdaq’s move towards tokenization, Ondo warned that “Nasdaq’s reference to non-public information implies access to diversity that deprives other companies of a fair opportunity to comment.”
The company also noted that NASDAQ’s rule cannot take effect until DTC finalizes its system, saying there is no harm in delaying approval until more features are rolled out. It called on the SEC to prioritize “open cooperation and transparent standards” before making a final decision.
Ondo’s letter responded to Nasdaq on Sept. 8 Filing with the SEC, where the second largest stock exchange is seeking to change its rules to allow trading in tokenized securities.
Tokenized shares are digital versions of traditional stock recorded on a blockchain.
If approved, the proposal would allow tokenized shares to trade alongside traditional ones, with settlements processed through the upcoming DTC system for tokenized securities.
Nasdaq’s proposal is Published In the Federal Register on September 22, the SEC’s 45-day review begins, running until early November or late December if extended.
Related: $250m Ondo Catalyst Fund Signals ‘Arms Race’ For RWA Tokenization
The push for tokenized stocks
The ongoing debate about the tokenization of NASDAQ stocks is happening as many platforms have listed or are planning to list tokenized versions of US equities.
On June 30, Robinhood launched a layer-2 blockchain to support trading Tokenized US stocks and ETFs For European users. The platform said it will list more than 200 US equities and funds as onchain tokens.
Trading platform ETORO also announced plans to launch tokenized stock as ERC-20 tokens on Ethereum. The company said the rollout will include 100 popular US-listed stocks and ETFs, available for trading 24/5.
Kraken is also following suit. The crypto exchange A tokenized securities platform has been launched In September, making tokenized shares available to eligible customers in Europe.
Galaxy Digital warns that the continued push for tokenization may Threaten the dominance of the New York Stock Exchangesaying in July that it was challenging the liquidity of traditional markets.
Magazine: Robinhood’s tokenized stocks have stirred a legal Hornet’s nest
