Ondo Finance Urges SEC, CFTC to Bring US Stock Perpetuals Onshore
The firm argues that existing securities laws are sufficient to regulate tokenized equity derivatives within the US.
Ondo Finance has called on the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to establish a regulatory framework for trading US stock perpetual futures onshore. The move seeks to bring tokenized equity derivatives into the regulated US market to prevent trading activity from shifting entirely offshore.
In comment letters filed with both the SEC and CFTC, Ondo Finance advocated for the onshore regulation of these instruments. The company argues that existing US securities and commodities laws already provide the necessary room to accommodate the design of perpetuals. Specifically, Ondo asserts that current security futures laws can support the mechanisms that drive perpetuals, such as funding rates and mark-to-market processes used to ensure price convergence.
The Shift Toward Tokenized Derivatives
Perpetual futures are a staple of the cryptocurrency ecosystem, functioning as derivative contracts that allow traders to maintain positions indefinitely without an expiration date. While these instruments are common for digital assets, they have not been integrated into the regulated US market for traditional equities. By advocating for their onshore adoption, Ondo is attempting to bridge the gap between traditional finance (TradFi) and decentralized finance (DeFi) mechanisms.
Ondo contends that the current trend of trading US-listed stock perpetuals in offshore jurisdictions is "backwards." The firm believes that the SEC and CFTC should actively work to repatriate this activity, ensuring that the trading of US-based assets occurs within the US regulatory perimeter rather than in less transparent global markets.
Market Implications
If the SEC and CFTC adopt this framework, it would legitimize a high-leverage trading instrument for US equities within the domestic market. Such a shift could significantly increase liquidity for tokenized equity derivatives and provide institutional-grade access to these products under the protection of US law. For the broader industry, this represents a potential milestone in the institutionalization of DeFi tools applied to traditional asset classes.
Regulatory Outlook
Whether the SEC and CFTC will act on these suggestions remains to be seen. The regulators have historically maintained a cautious approach toward tokenized derivatives and high-leverage instruments. Market participants are now watching to see if the agencies will acknowledge Ondo's argument that existing laws are sufficient, or if they will maintain the current restrictions that keep these instruments offshore.