Ondo Finance has inked a deal with SBI Group for a collaboration in which Ondo Global Markets will tokenize Japanese equities and will also use JPYSC, the first trust type stablecoin in Japan issued by SBI Shinsei Trust Bank. The deal also involves Ondo tokenized stocks being distributed through the SBI Group, likely including its brokerage SBI Securities.
SBI Securities will not be the first regulated entity to get involved with the tokenized stocks. Deutsche Börse’s Clearstream also has a deal with Ondo, and the tokens trade on 360X, a venue regulated under the EU’s DLT Pilot Regime and owned by the Deutsche Börse Group and Commerzbank [CHECK], though only for professional investors.
BVI based Ondo Global Markets has the largest retail tokenized stock issuance (currently just over $1 billion) and decent distribution. But some object to the tokenized stock label because they are in fact structured products. The tokens represent loan notes backed 1 for 1 by the stock and tracking its price. Token holders must be based outside the US and have no ownership rights. The debt is issued by an unregulated entity, Ondo Global Markets, with the stocks in custody at US tech broker Alpaca, and Ankura Trust holding security over the accounts on behalf of token holders. What users get in exchange for this elevated credit risk is greater convenience if they are interested in DeFi.
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