Davis Polk & Wardwell met with the US Securities and Exchange Commission's Crypto Task Force

The meetings focused on structuring options and regulatory considerations for issuing tokenized securities, particularly those referencing assets such as US equities and fixed-income instruments.

The U.S. Securities and Exchange Commission’s (SEC) Crypto Task Force met with Ondo Finance and legal counsel from Davis Polk & Wardwell on April 24 to discuss regulatory pathways for tokenized versions of publicly traded U.S. securities, according to a meeting summary viewed by the agency’s staff.

The meeting minutes, dated April 24, offer insights into the ongoing efforts of the SEC to navigate the intersection of digital assets and traditional securities.

The meeting focused on structuring options and regulatory considerations for issuing tokenized securities, particularly those referencing assets such as U.S. equities and fixed-income instruments.

Topics listed saw Ondo’s presentation highlight the regulatory challenges posed by tokenized securities, including registration requirements under the Securities Act, broker-dealer obligations under the Exchange Act, market structure rules, financial crimes compliance, and the application of state corporate laws.

The firm proposed discussing structuring approaches that would facilitate the compliant issuance and distribution of tokenized securities, while also exploring possibilities for participating in a regulatory sandbox or obtaining targeted relief to streamline the process further.

Additionally, Ondo’s legal team from Davis Polk & Wardwell illuminated key considerations around investor protection, anti-money laundering compliance, and the application of the Exchange Act to token-based issuance models.

Expanding institutional-grade tokenization

This initiative marks another step in Ondo’s broader push to integrate traditional financial assets into blockchain-native environments. The firm currently manages over $1 billion in tokenized products, rendering it a leading player in the space.

Out of the $6.15 billion tokenized U.S. Treasuries market, Ondo’s products comprise 16.4%.

The Ondo Short-Term US Government Bond Fund (OUSG) is a blockchain-based fund that provides tokenized exposure to short-term U.S. Treasuries. Its primary backing is the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), and the fund endeavors to deliver yield at all times while maintaining liquidity.

Meanwhile, a combination of short-term Treasuries and demand deposits held with banks secures Ondo’s US Dollar Yield Token (USDY).

Designed to mimic the accessibility of stablecoins, USDY is targeted at non-U.S. investors seeking exposure to U.S. dollar-denominated returns without engaging traditional financial intermediaries.

Both products fall within a broader and rapidly expanding asset class in tokenized finance, which essentially consists of applying blockchain infrastructure to wrap and manage real-world securities in a digitally native format.

Despite the growing interest in tokenized versions of traditional assets, the legal and regulatory landscape remains unclear, posing challenges to firms like Ondo seeking to launch and operate such products.

This meeting with the SEC’s Crypto Task Force is a part of a broader industry effort to seek clarity on regulatory guidelines since SEC leadership changed in January.

Since rolling out its Crypto Task Force on January 21, the regulator has reportedly held 81 meetings with key figures from the crypto industry. The meetings covered a broad range of subjects, including the possibility of implementing staking in exchange-traded products (ETPs) and the impact of market manipulation on centralized platforms.

These moves highlight how the regulator is now engaging with the crypto industry more openly since President Donald Trump's administration began its term.