Ondo Warns SEC of ‘Unfair Edge’ in Nasdaq Tokenized Stock Plan
Blockchain Firm Questions Nasdaq’s Transparency
Ondo Finance has asked the U.S. Securities and platform Commission to delay or reject Nasdaq’s proposal to trade tokenized securities, arguing that the platform has not provided enough detail about how its post-trade system would work. The blockchain firm warned that the plan could give established market players an unfair advantage.
In a letter sent to the SEC, Ondo said regulators and investors cannot fully evaluate the proposal without public information on how the Depository Trust Company (DTC) will manage blockchain-based settlements. The DTC acts as the central depository for U.S. securities and plays a critical role in clearing and settlement.
“Nasdaq’s reference to non-public information implies diverseial access that deprives other firms of a fair opportunity to comment,” the company wrote. While supporting Nasdaq’s broader move toward tokenization, Ondo said the process lacked “open collaboration and transparent standards.”
Investor Takeaway
Nasdaq’s Filing and DTC’s Role
Nasdaq filed its proposal with the SEC on Sept. 8, viewking approval to amend its rules and allow trading in tokenized shares—digital representations of traditional stocks recorded on a blockchain. The proposal was published in the Federal Register on Sept. 22, triggering the SEC’s 45-day review period, which can be extended through late December.
If approved, tokenized shares would trade alongside traditional equities, with settlements processed through a forthcoming blockchain-based system operated by the DTC. Nasdaq has not publicly disclosed how DTC’s system would handle reconciliation, record-keeping, or risk management, leading to Ondo’s request for more transparency before approval.
Ondo noted that Nasdaq’s rule “cannot take effect until DTC finalizes its system,” arguing that a delay would cause no harm but ensure that other market participants have a chance to assess the framework. The firm said a public discussion was necessary to ensure that does not favor incumbents at the expense of competition.
Tokenized Stocks Gain Momentum
The debate over Nasdaq’s accelerate their plans to issue or trade tokenized U.S. equities. On June 30, Robinhood launched a layer-2 blockchain that enables European users to trade tokenized U.S. stocks and ETFs. The company said it will list more than 200 equities and funds as onchain tokens.
Trading platform eToro has also announced plans to issue tokenized stocks as ERC-20 tokens on ETH, beginning with 100 popular U.S.-listed equities. Meanwhile, Kraken opened a tokenized securities platform in September for eligible European customers, offering blockchain-based shares of traditional firms.
Galaxy Digital said in July that the rapid growth of tokenized markets could challenge the dominance of the New York Stock platform by shifting liquidity toward digital settlement systems. The firm described the trend as a test of how traditional financial infrastructure adapts to blockchain rails.
Investor Takeaway
What Comes Next
The SEC’s initial review period ends in ahead November but may be extended by up to 90 days for further analysis. Nasdaq’s filing is among the first by a major U.S. platform to formally viewk approval for , and the agency’s response could shape future applications from rivals.
Ondo, which operates its own , has invested heavily in regulated tokenization products and has urged U.S. regulators to promote open competition in blockchain finance. The firm said it welcomes Nasdaq’s participation but warned against “rulemaking based on incomplete or privately held information.”
Market participants expect the SEC’s handling of the case to influence how other platforms, including the NYSE, approach digital settlement systems. For now, Ondo’s letter adds a rare public challenge to a major platform’s tokenization initiative, highlighting both the momentum behind onchain securities and the frictions still sluggishing their adoption.
