Ondo Finance Calls for Proportional, Blockchain-Friendly Transfer Agent Rules
TREE NEWS reports: Ondo Finance has submitted a comment letter to the U.S. Securities and Exchange Commission (SEC) regarding the agency’s proposed rules for transfer agents, arguing that the current framework fails to account for the realities of tokenized securities on public blockchains. The company is calling for a more proportionate approach to information collection and legal review, and for rules that explicitly support public blockchain infrastructure without requiring transfer agents to control entire networks.
Key Proposals
- Proportionality in compliance: Ondo recommends that information requirements and legal reviews be matched to the nature of the transaction, avoiding redundant collection of already-verified personal data or duplicative legal work when there is no clear purpose.
- Support for public blockchains: The rules should allow transfer agents to operate on public blockchains without mandating control over the entire network, which would be impractical and stifle innovation.
- Feasible compliance paths for smaller providers: Ondo urges the SEC to create viable compliance pathways for smaller service providers, preventing market concentration and fostering competition.
Industry Implications
The letter comes as tokenized real-world assets (RWAs) gain momentum, with Ondo emerging as a leading player in tokenized U.S. Treasuries and other yield-bearing instruments. Transfer agents are critical intermediaries in securities markets, responsible for maintaining records of ownership, processing transfers, and ensuring compliance. Applying traditional transfer agent rules to blockchain-based securities without adjustment could impose heavy burdens on issuers and intermediaries, potentially slowing the growth of the tokenized securities market.
Ondo’s recommendations align with a broader industry push for regulatory clarity that recognizes the unique characteristics of distributed ledger technology. By advocating for proportional compliance and public blockchain support, Ondo is positioning itself as a constructive voice in shaping the regulatory landscape for tokenized assets. The SEC’s response to these comments will be closely watched by market participants, as it could set a precedent for how tokenized securities are treated under U.S. law.
Forward-Looking Perspective
As the SEC continues to refine its approach to digital assets, the outcome of this rulemaking could significantly impact the pace of institutional adoption of tokenized securities. If the SEC adopts a flexible, innovation-friendly framework, it could unlock new efficiencies in securities settlement and broaden access to capital markets. Conversely, overly prescriptive rules could push tokenization activity offshore. Ondo’s engagement signals that the industry is eager to work with regulators to build a robust, compliant ecosystem for tokenized RWAs.
