First US Compliant Tokenized Stock Launched, Ondo Brings S&P 500 ETF and Micron On-Chain

Author: Claude, TechFlow

TechFlow Editor's Note: On July 2, Ondo Finance announced the tokenization of BlackRock's S&P 500 ETF (IVV) and Micron stock, becoming the first actual implementation case of the 'Third-Party Custody Model' proposed by the SEC in January this year. The underlying stocks remain within the traditional custody system, and token holders can exercise voting rights through Broadridge. However, the product is not currently open to U.S. investors, and the SEC staff statement does not equal formal rules.

Tokenized stocks finally have a version approved by regulators in the United States.

According to CoinDesk, Ondo Finance announced on July 2 the issuance on Ethereum of tokenized versions of BlackRock's S&P 500 Index ETF (IVV) and Micron Technology (MU) stock. This is the first production environment deployment of the 'Third-Party Custody Model' since the SEC issued its staff statement on tokenized securities in January this year, and also the first time U.S. listed securities have been tokenized by a third party without leaving the country or bypassing through offshore structures.

Ondo CEO Ian De Bode stated in the announcement, 'Today's milestone shows that we are able to tokenize securities in a way that meets both market and regulatory requirements, serving U.S. and global investors, and laying the foundation for more U.S. investors to access on-chain investment.'

The First Batch of Targets Selected Two of the Most Mainstream Assets

Neither of the two targets tokenized this time are obscure assets. IVV is BlackRock's flagship ETF tracking the S&P 500, while Micron is a star stock in the current memory chip cycle. Using a broad-based ETF plus a hot tech stock to validate the new model, Ondo's intention is clear: first prove that 'mainstream assets can also be compliantly on-chained'.

In terms of specific architecture, the underlying IVV and Micron stocks always remain within the U.S. traditional custody chain, held by regulated custodians. Oasis Pro TA, the SEC-registered transfer agent acquired by Ondo last year, mints corresponding tokens on Ethereum at a 1:1 ratio, and transfer restrictions are jointly enforced by participating brokers, transfer agents, and custodians.

According to Ondo, its overseas Global Markets platform has currently tokenized over $1 billion worth of stocks and ETFs, covering more than 430 securities, ranking first in the industry by total value of tokenized securities. This is the first time the company has extended its business into the U.S. domestic framework.

Essential Difference from the Model Where Robinhood Was Contradicted by OpenAI

For ordinary investors, the question truly worth caring about in this release is whether the tokenized stocks bought actually count as equity.

This issue caused a controversy last year. After Robinhood launched tokenized products linked to OpenAI shares in Europe, OpenAI publicly stated it did not authorize the product and warned that these tokens do not represent company equity. Those products belonged to the 'Synthetic Model,' where the issuer had no relationship with the underlying company, and investors received only price exposure, without shareholder status.

The SEC's staff statement in January this year provided another path. Under the Third-Party Custody Model, regulated intermediaries hold real stocks and then issue on-chain tokens representing holder rights. According to The Block, Ondo's product this time is built around this framework, where token holders receive the same shareholder rights and protections as investors with traditional brokerage accounts, including issuer notifications and on-chain proxy voting.

From a holding perspective, this difference means that behind the tokens under the custody model there are real stocks, voting rights, and information disclosure, while under the synthetic model there is only a price shadow.

Wall Street Veteran Infrastructure Broadridge Enters to Manage Voting

Another signal from this release is the deep participation of traditional financial infrastructure.

Broadridge (NYSE ticker BR) is an infrastructure giant in the field of U.S. shareholder communications and proxy voting, where shareholder voting for a large number of listed companies across the U.S. runs on its ProxyVote.com platform. In this collaboration, Broadridge is responsible for providing proxy voting, regulatory disclosure, and shareholder communication services for Ondo's token holders, and token holders can participate in voting directly on-chain.

Doug DeSchutter, President of Broadridge's Investor Communications Solutions business, stated in the announcement, 'By providing proxy voting, issuer communications, and regulatory disclosure for Ondo's token holders, we are delivering on our promise to provide complete and trustworthy governance capabilities for investors and issuers, regardless of what structure the asset exists in.'

The tokenization sector has seen intensive moves recently. Robinhood launched its own public chain on July 1 and expanded tokenized stocks beyond Europe, DTCC (The Depository Trust & Clearing Corporation) announced in May the introduction of tokenized assets to the Stellar chain, Nasdaq received SEC approval to conduct tokenized securities trading in March, and the NYSE has also announced related plans. According to a June report from Citi cited by CoinDesk, the tokenized securities market size could reach $5.5 trillion by 2030.

Not Currently Open to U.S. Investors, Note Two Risk Points First

For readers who want to participate, there are two things to temper expectations about first.

First, according to CoinDesk, the product is not currently open to U.S. investors. Ondo is mostly validating architectural feasibility this time, and the actual opening time for U.S. retail investors is undetermined.

Second, the SEC's January statement is a staff statement, representing only the directional thinking of regulatory personnel, and does not have the effect of rules formally approved by the Commission. In other words, the compliant status of this model still has the possibility of being modified by subsequent formal rules.

For ONDO token holders, as of press time, ONDO was trading at about $0.33, up about 4% in 24 hours. The news has limited direct pull on the coin price, the mid-term logic depends on when U.S. investors can actually buy these products, and whether the custody model can expand from the two targets to the more than 430 securities on Ondo's overseas platform. Before these two nodes are implemented, the significance of this release lies mainly at the regulatory level, rather than the revenue level.