Ondo Finance, a United States Treasury tokenization protocol, is anticipating the convergence of traditional finance and blockchain technology in the near future. To align with this trend, the company recently opened its first office in Hong Kong to expand its on-chain treasury offerings to investors in the Asia Pacific region. Nathan Allman, the CEO of Ondo Finance, highlighted the advantages of tokenized treasuries, such as their ability to be transferred on-chain 24/7 and interact with smart contracts. This enables investors to leverage DeFi and earn sustainable yield, unlike traditional brokerage accounts.
Ondo Finance currently offers three products: OUSG, providing exposure to U.S. Treasurys; OMMF, providing exposure to U.S. money market funds; and USDY, offering a yield-bearing alternative to conventional stablecoins. These products have a total value locked of approximately $186 million and generate an annual yield of around 5%. The underlying assets, U.S. Treasurys, are backed by the United States government and financed through sources like income tax and corporate taxes.
Allman expressed Ondo Finance’s plans to bring more than $100 trillion worth of securities on-chain, in addition to their existing cash equivalents. The company also aims to address infrastructure-layer challenges to facilitate the widespread creation and use of tokenized securities on public blockchains.
Currently, Ondo’s tokenized assets are not available to U.S. investors due to regulatory uncertainties. Non-U.S. users who wish to invest in Ondo’s treasury pools must undergo Know Your Customer and Anti-Money Laundering verification checks and hold the tokenized assets for at least 40 days before transferring them. Allman clarified that while there are no specific regulations for tokenized assets, the existing products in the tokenized market comply with relevant regulations and exemptions outside the U.S.
Hong Kong is a jurisdiction that welcomes real-world asset tokenizers, as demonstrated by the Hong Kong Monetary Authority’s recent letter outlining governance and risk management principles for tokenization firms. These rules are expected to come into effect in August.
In the realm of tokenization, real-world asset protocols have outperformed DeFi blue chips due to the growing wave of tokenization.