SEC drops investigation into Ondo Finance! A new era of regulatory shift for tokenized assets begins

The US Securities and Exchange Commission (SEC) has concluded its two-year investigation into Ondo Finance and has not recommended any charges. The investigation, launched in October 2023, focused on whether Ondo violated securities laws in its tokenization of US Treasuries and whether its ONDO token should be considered a security. The company stated that the regulator notified them at the end of November that the investigation had been closed, a decision in line with the regulatory shift under the leadership of Paul Atkins.

From Gensler’s Tough Enforcement to Atkins’ Embrace of Innovation

This case of investigation withdrawal vividly demonstrates a 180-degree policy shift at the SEC following a change in leadership. When Gary Gensler launched the investigation into Ondo Finance in October 2023, it was during his most aggressive enforcement period toward the crypto industry. Gensler insisted that most crypto assets were securities and should fall under SEC jurisdiction, leading the SEC to initiate a series of lawsuits against major platforms such as Ripple Labs.

Ondo Finance becoming a target of investigation came as no surprise. The company focuses on tokenizing traditional financial assets like US Treasuries and has issued the ONDO governance token. Under Gensler, the SEC was skeptical of this business model, believing tokenized assets might circumvent traditional securities regulatory frameworks, and that governance tokens themselves might qualify as securities. Over the two-year investigation, Ondo Finance had to devote substantial resources to regulatory scrutiny, undoubtedly delaying its expansion efforts in the US market.

However, after Paul Atkins took over as SEC Chair in early 2025, the regulatory climate shifted dramatically. Atkins is a longtime supporter of the crypto industry, believing that excessive enforcement stifles innovation and advocating for a clear regulatory framework rather than defining rules through litigation. Under his leadership, the SEC has withdrawn or settled numerous crypto cases left by his predecessor. The years-long lawsuit between Ripple Labs and the SEC ended in a settlement, and investigations into the largest US crypto exchanges have also concluded.

The withdrawal of the Ondo Finance investigation is the latest example of this policy shift. The SEC’s decision not to recommend charges essentially recognizes that Ondo’s business model aligns with the current legal framework. This provides critical regulatory clarity for the tokenized asset sector and signals to other companies that, under Atkins, the SEC is willing to collaborate with innovators rather than confront them.

Ondo Finance’s Three-Step US Expansion Strategy

(Source: Ondo Finance)

With the regulatory cloud lifted, Ondo Finance says it is now cleared to accelerate its US growth strategy. The acquisition of Oasis Pro Markets is a particularly crucial move, enabling Ondo to expand its tokenized asset offerings in a structure fully compliant with US standards. As a registered broker-dealer, Oasis Pro holds full SEC and FINRA licenses, meaning Ondo can operate within the existing regulatory framework without waiting for new legislation or rulemaking.

This “compliance first, then expansion” strategy contrasts with the aggressive approaches of many crypto companies. Ondo chose to keep a low profile during periods of regulatory uncertainty, focusing on building infrastructure that meets traditional financial standards. Now, with the investigation closed, this patient approach is paying off. Ondo now enjoys not only regulatory clearance but also a complete compliance toolkit, allowing it to immediately start offering tokenized products to institutional clients.

The New York summit on February 3 is expected to be a stage for Ondo to showcase its achievements. Industry speculation suggests the company may announce partnerships with major asset managers or banks, or launch new tokenized product categories. With the SEC’s stance on tokenization shifting to support, Ondo is well positioned to seize early market leadership.

Strategic Deployment After the Lifting of Regulatory Uncertainty

Registered as an Investment Adviser: Ondo has completed registration as an investment adviser with the SEC, enabling it to provide investment advisory services on tokenized assets to institutional clients—a necessary qualification for entering the institutional market.

Acquisition of Oasis Pro Markets: This SEC-registered broker-dealer and Alternative Trading System (ATS) operator acquisition gives Ondo fully compliant trading infrastructure, allowing direct issuance and trading of tokenized securities.

February 3 New York Summit: The annual Ondo summit in New York will serve as a platform to showcase new tools and products, with the public expecting major announcements to drive real-world asset tokenization.

SEC’s New Policy: Tokenization Becomes a Core Agenda

As the Ondo investigation concludes, tokenization has become a focal topic for US financial regulators. At last week’s SEC Investor Advisory Committee meeting, the agency emphasized how blockchain infrastructure can streamline the issuance, trading, and settlement of public equities. “The tokenization of financial assets—including securities—has the potential to fundamentally transform our capital markets,” Chair Atkins stated at the meeting.

This position marks a fundamental shift in the SEC’s stance. Under Gensler, tokenization was seen as a potential regulatory evasion tool, with the SEC focused on ensuring such activities were tightly supervised. Atkins, in contrast, views tokenization as a technological innovation to improve market efficiency, seeing the SEC’s role as facilitating, not hindering, its development.

The practical implications of this policy shift are profound. Traditional securities issuance and trading involve multiple intermediaries, are costly, and take a long time. In theory, blockchain technology can automate these processes, enabling instant settlement and significantly reducing costs. However, regulatory uncertainty has long been a major hurdle. Atkins’ clear support gives financial institutions the confidence needed to start seriously investing in tokenization infrastructure.

Wall Street Giants Race into the Tokenization Market

The broader tokenization narrative continues to build momentum across the industry. Major financial institutions such as BlackRock, JPMorgan, Citi, and Dinari have already deployed tokenized assets on blockchains like Avalanche. BlackRock’s BUIDL fund is the first tokenized money market fund launched by a Wall Street giant and has attracted hundreds of millions of dollars. JPMorgan’s Onyx division is developing a tokenized asset trading platform for institutional clients.

The involvement of these institutions validates the commercial viability of tokenization. When the world’s largest asset managers and banks are investing resources to develop these products, it’s no longer experimental technology but the next evolutionary stage of financial infrastructure. Ondo Finance’s advantage lies in its early entry and focused strategy, but as Wall Street giants enter the field in force, competition will become increasingly fierce.

With the SEC’s repositioning and companies like Ondo gaining regulatory clearance, the next phase of tokenization in the US appears poised to accelerate. The next 12 months will be a critical period to determine which companies can establish leadership positions in this rapidly growing market.