Ondo Finance: A new era of US stock tokenization begins with the 2026 Solana deployment

Pioneers in RWA Tokenization Announce Major Expansion into Stock Markets, Enabling 24/7 On-Chain Trading

Ondo Finance, a leader in the tokenization of real-world assets(RWA), plans to launch a service in early 2026 on the Solana blockchain, offering tokenized US equities and exchange-traded funds(ETF). This announcement indicates a significant expansion from the company’s existing tokenization of US Treasuries and money market funds, suggesting that tokenized securities could break through traditional trading hours constraints and enable continuous trading.

What Changes with Tokenized Trading

Traditional US stock markets operate only on weekdays from 9:30 am to 4:00 pm Eastern Time, approximately 6.5 hours, with very limited liquidity during pre-market and after-hours sessions. The tokenized US equities Ondo aims to provide, via blockchain infrastructure, continuous 24/7 trading and instant settlement from anywhere in the world.

What sets this approach apart from conventional synthetic derivatives or CFDs is its custody-based structure. Since actual securities are stored with qualified financial institutions, each token is guaranteed to represent true ownership of stock or ETF units, providing exposure to real assets rather than speculative products.

Why Solana Was Chosen

Ondo’s choice of Solana is based on technical rationality. Solana offers high throughput capable of processing thousands of transactions per second and low costs (less than a few cents per transaction), making frequent trading and small-value transfers economically feasible. This contrasts with Ethereum’s high gas fees and creates an environment suitable for large-scale trading of tokenized securities.

What Ondo Finance’s Track Record Shows

To understand Ondo’s ambitious plans, it’s important to look at their proven success:

USDY(U.S. Dollar Yield) provides tokenized exposure to short-term US Treasuries and bank demand deposit accounts, with over $500 million in assets under management(AUM).

OUSG(Ondo Short-Term U.S. Government Treasuries) offers institutional investors on-chain access to short-term government bonds, establishing trust.

The company has successfully navigated US securities registration requirements and built custody relationships with major financial institutions like BNY Mellon and State Street. This regulatory experience and partnerships with institutional investors form a solid foundation for expanding into more complex stock tokenization.

Regulatory Environment Complexity

The timeline of early 2026 suggests a lengthy process involving substantial regulatory approval. Challenges include SEC registration of securities, application of nominee registration rules, broker-dealer registration requirements, and strict custody regulations.

Additionally, AML/KYC compliance creates tension with blockchain’s inherent anonymity, and initial offerings are likely to be limited to accredited or institutional investors rather than retail investors. A 12+ month timeline indicates Ondo views this as a long-term process involving phased discussions with the SEC and potential new regulatory interpretations.

Core Technical Challenges

Achieving 24/7 trading requires sophisticated technical infrastructure, including:

Price Discovery: During trading hours, real-time stock prices can be referenced, but outside trading hours, reliance on closing prices or fair value estimates may create arbitrage opportunities.

Settlement Finality: On-chain settlement occurs within seconds to minutes, but final transfer of custody still follows traditional settlement timelines.

Corporate Actions: Handling dividends, stock splits, mergers, etc., requires smart contract logic or manual intervention, especially complex cases.

Voting Rights: Exercising voting rights may require additional verification since blockchain addresses might not meet shareholder registry requirements, necessitating delegated voting mechanisms.

Potential Impact on Market Structure

Running tokenized securities alongside traditional markets could create new market dynamics:

Liquidity Fragmentation: Order flow may split between NYSE/Nasdaq and blockchain-based exchanges, reducing depth in both.

Price Discovery Efficiency: Maintaining price parity across different market structures requires efficient arbitrage.

Price Gaps Outside Market Hours: Volatility may increase due to price gaps between close and open.

Success hinges on whether liquidity can develop to make tokenized securities a viable alternative or whether they remain niche offerings.

Potential User Base Analysis

Overseas Investors benefit most from eliminating time zone constraints. Investors in Japan, Asia, and Europe can access US stocks during their local trading hours.

Crypto-native Investors already holding digital assets gain more direct access to US equities without complex fiat off-ramps.

DeFi Integration could enable tokenized stocks to serve as collateral in lending protocols or liquidity pools in automated market makers, creating new financial products.

Fractional Ownership and Small Investments become feasible with low transaction costs, allowing high-value stocks to be purchased in dollars rather than full shares.

Programmatic Trading and algorithmic strategies benefit from API-based blockchain access and 24/7 markets.

Conversely, mainstream retail investors satisfied with zero commissions and user-friendly interfaces may find switching to blockchain alternatives less compelling due to complexity and limited initial product range.

Industry Competition and Positioning

Backed Finance leverages Switzerland’s favorable regulatory environment to offer tokenized stocks, while protocols like Synthetix provide synthetic equity exposure via DeFi. Traditional asset managers like BlackRock and Franklin Templeton, currently focused on money market funds and bonds, are also exploring tokenization.

Ondo’s competitive edge lies in its established RWA platform, network relationships with Solana’s infrastructure, existing institutional partnerships from bond products, and extensive regulatory experience.

Revenue Model and Economic Feasibility

Management Fees: Similar to ETF expense ratios, providing scalable recurring revenue based on AUM.

Trading Fees and Spreads: Additional revenue streams, though likely minimized by competitive pressures.

Custody Fees: Charged by the primary custodian, impacting economics unless scaled significantly.

Technology Licensing: Potential for additional revenue through licensing solutions to other institutions.

Major Risks

Regulatory Approval Uncertainty: The biggest risk; SEC may deny approval or impose restrictions.

Custody and Counterparty Risks: Risks associated with financial institution solvency or system failures.

Smart Contract Vulnerabilities: Potential security breaches through exploits.

Market Adoption: Uncertain; investors may prefer familiar traditional brokers due to learning curve.

Liquidity Shortage: Can lead to wide spreads and poor execution.

Oracle and Price Setting Risks: Manipulation risks during after-hours trading.

Regulatory Changes: New restrictions could emerge post-launch.

Comparison with Traditional Brokerages

Current major online brokerages offer zero-commission trading, decades of refined user interfaces, SIPC insurance, access to thousands of products, excellent customer service, and seamless tax reporting.

Tokenized versions offer 24/7 trading, programmability, and DeFi integration but face challenges like complex wallet management, limited initial product scope, unestablished tax reporting, and lack of margin/lending features.

Convincing mainstream investors requires benefits that justify switching costs and learning curves beyond novelty.

Appeal to Institutional Investors

Success likely depends more on institutional segments:

Hedge Funds and Proprietary Trading Firms can utilize 24/7 markets for risk management and algorithmic strategies.

Overseas Asset Managers can improve efficiency by accessing US stocks during local hours.

Crypto Funds and Asset Managers can enable diversified investments without complex fiat conversions.

Family Offices and High Net Worth Individuals may value programmability and DeFi features.

Pension Funds and Insurers face regulatory and operational hurdles, making short-term adoption less likely.

Initially, offerings will probably be limited to accredited and institutional investors.

Navigating the Global Regulatory Environment

While Solana’s blockchain features facilitate easier access for non-US investors, Ondo must navigate complex international regulations:

Cross-Border Securities Laws: Limit offerings to foreign investors without complying with local laws.

Geofencing and Access Control: Difficult to enforce due to blockchain’s pseudonymity.

International Custody and Settlement: Challenges related to currency conversion and tax withholding.

MiCA Regulations (EU): May impose requirements on crypto asset service providers, affecting access to EU markets.

Fragmented Tokenization Approaches: Different jurisdictions like Switzerland, Singapore, UAE may develop limited interoperability niche markets.

Technical Infrastructure Components

Institutional-grade tokenized securities require an integrated tech stack:

Solana Blockchain: Provides the base layer with proof-of-stake consensus and high throughput.

Smart Contracts: Automate token issuance, redemption, corporate actions, and compliance rules.

Oracle Integration: Supplies real-time and historical price data for fair valuation and settlement.

Custody API Integration: Connects blockchain with custody providers holding the underlying securities, enabling coordinated issuance and redemption.

KYC/AML Layer: Performs off-chain investor identity verification and sanctions screening.

Institutional Wallets: Integrate custody solutions like Fireblocks, Anchorage, BitGo for secure storage.

Analytics & Reporting Tools: Offer performance tracking, tax documentation, and portfolio management comparable to traditional platforms.

Realizing Ondo’s tokenization vision involves complex integration of these technological and regulatory components, and whether the 2026 timeline is feasible depends heavily on regulatory discussions and approvals.