Ondo Finance Expands Tokenized Treasury in Crypto Bull Market

Ondo Finance, a United States Treasury tokenization protocol, foresees the integration of traditional finance with blockchain technology in the near future. To prepare for this shift, the protocol recently opened its first office in Hong Kong to expand its on-chain treasury offerings to investors in the Asia Pacific region. In an interview with , Nathan Allman, the CEO of Ondo Finance, explained the advantages of tokenized treasuries over traditional treasuries. Tokenized treasuries can be transferred on-chain 24/7, can interact with smart contracts, and can be traded on decentralized and centralized exchanges and over-the-counter. This allows investors to leverage decentralized finance (DeFi) while earning sustainable yield. Ondo Finance’s DeFi protocol, Flux, enables peer-to-pool lending with algorithmically determined interest rates without intermediaries.

Ondo Finance offers three products: OUSG, which provides exposure to U.S. Treasurys; OMMF, which provides exposure to U.S. money market funds; and USDY, which offers a yield-bearing alternative to conventional stablecoins. These products have a total value locked of around $186 million and boast an annual yield of approximately 5%. The underlying assets, U.S. Treasurys, carry the guarantee of the United States government and are backed by revenue from sources such as income tax and corporate taxes.

Allman revealed Ondo Finance’s plans to bring more than $100 trillion worth of securities on-chain in addition to their existing offerings. Currently, Ondo’s tokenized assets are not accessible to U.S. investors due to regulatory uncertainties in the country. Non-U.S. users who want to invest in Ondo’s treasury pools must pass a Know Your Customer and Anti-Money Laundering verification check and hold the tokenized assets for at least 40 days before transferring them. Allman clarified that while there are no dedicated regulations for tokenized assets, the existing structure of the tokenized market is designed to comply with current regulations and exemptions outside the U.S.

Hong Kong, a jurisdiction eager to onboard real-world asset tokenizers, is one of the places where regulators are supportive of tokenization firms. The Hong Kong Monetary Authority recently outlined principles of governance and risk management, asset segregation, outsourcing, disclosure, anti-money laundering, and counter-financing of terrorism for tokenization firms in a letter dated February 20. These new rules are expected to come into effect in August, further facilitating the integration of tokenized assets into the financial system.