Ondo Finance, a prominent player in the real-world asset (RWA) tokenization space, has urged the U.S. Securities and Exchange Commission (SEC) to hold off on approving Nasdaq's proposal to list and trade tokenized securities. In a formal letter to the SEC, Ondo Finance expressed concerns about the lack of transparency surrounding the Depository Trust Company's (DTC) planned system for settling tokenized assets.

Nasdaq's proposal, filed with the SEC as "SR-NASDAQ-2025-072," outlines potential rule changes that would allow tokenized versions of stocks and exchange-traded funds (ETFs) to be traded alongside traditional shares. These tokenized securities would be cleared through the DTC, a central securities depository that provides settlement services and safekeeping for securities transactions. Nasdaq believes that tokenization can be adopted without compromising investor protection.

Ondo Finance, however, argues that the proposal should not move forward until the DTC publicly discloses crucial details about how tokenized settlements will function. The company emphasizes that new market rules must be built on clear, public information available to all market participants. Without more information about how the DTC will handle tokenized settlement, Ondo contends that regulators, market participants, and investors cannot properly assess the proposal's functionality.

In its letter, Ondo Finance stated that Nasdaq's understanding of DTC's tokenization efforts was described as a "preliminary sense" rather than confirmed data. The company said this uncertainty prevents meaningful public comment. It urged the SEC to require DTC to disclose more before approving the rule.

Ondo Finance warns that moving forward without transparency could give larger financial institutions an unfair edge or make it harder for newer firms to compete. The firm suggests that limited information risks giving certain institutions early insight, leaving smaller market participants at a disadvantage. According to Ondo's open letter to the SEC, Nasdaq's filing relies on assumptions about DTC's process rather than verifiable facts.

The company stated that it supports efforts to modernize finance but insists those changes must be built on fair access to information. It also signaled willingness to back Nasdaq's proposal once DTC's settlement details are made public.

The SEC is prioritizing tokenizing assets. SEC Commissioner Hester Peirce said tokenization is a "huge focus" for the agency. SEC Chair Paul Atkins has emphasized the need to integrate blockchain technology into the structure of U.S. financial markets. According to Atkins, the SEC plans to release draft proposals addressing tokenized markets and digital asset disclosure standards before the end of the fiscal year.

However, some critics are wary of the risks. Better Markets' Director of Securities Policy Benjamin Schiffrin has raised concerns about the possible dangers tokenization poses to investor protection. Schiffrin warned that the SEC's potential “innovation exemption” could lead to weakened safeguards. He stated that it is not clear that investors want or need tokenized securities.