Ondo Finance Advocates for Onshoring US Stock Perpetual Futures
Vexoda Newsroom
Ondo Finance is urging US regulators, the SEC and CFTC, to bring perpetual futures tied to individual US stocks onto domestic exchanges, arguing existing laws are sufficient.
Ondo Finance, a prominent player in the tokenized real-world assets (RWA) sector, has formally requested that US financial regulators, specifically the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), take steps to "onshore" perpetual futures contracts based on individual US-listed stocks. The company believes that existing US securities legislation already possesses the necessary framework to accommodate these derivatives without the need for entirely new regulatory provisions. This initiative aims to bring significant trading volume and innovation currently operating offshore back within the United States' regulatory purview.
The core of Ondo's argument rests on the assertion that current US securities laws can adequately govern stock-based perpetual futures. In detailed comment letters submitted to both the SEC and CFTC, Ondo highlighted that modern margining techniques and the availability of on-chain market data can be integrated within the existing regulatory structure. Their affiliated entity in Panama already facilitates such trading, achieving a substantial cumulative trading volume of $8 billion within roughly six weeks of its launch, indicating a strong market demand for these products.
Ondo emphasizes that perpetual futures, while lacking a fixed expiration date common in traditional futures contracts, utilize funding payments to maintain alignment with the price of their underlying assets. This mechanism effectively serves a similar price-discovery and settlement function as traditional expiry dates. The company pointed out that a significant portion of the stocks underpinning these offshore perpetuals are predominantly traded on US exchanges, making a strong case for relocating this activity to domestic platforms. They argue that bringing this business onshore should be an active pursuit for regulators.
The proposal from Ondo comes at a time when US regulators are actively re-evaluating how established market rules apply to the rapidly evolving landscape of digital assets and onchain products. There is a broader push within the US to modernize financial regulations to better encompass innovations like tokenized securities and decentralized derivatives markets. This review includes an examination of existing frameworks to determine their suitability for new financial instruments and technologies emerging within the crypto space.
The market has shown responsiveness to developments in the regulatory approach towards onchain derivatives. For instance, comments attributed to President Donald Trump regarding bringing the Hyperliquid perpetual futures market onshore led to a significant price surge in its native token, HYPE. This reaction underscores the market's sensitivity to regulatory clarity and potential shifts in the accessibility of such products within the US, suggesting that positive regulatory developments could unlock substantial market interest and capital inflow.
The implications of Ondo's advocacy extend beyond just the company itself. Successful onboarding of stock perpetuals could signal a more open regulatory stance towards innovative crypto-financial products in the US. It could foster greater integration between traditional finance and the digital asset ecosystem, potentially leading to increased liquidity and broader adoption of RWA-based financial instruments. This development could also pave the way for other similar products to seek regulatory approval and operate within the US.
Looking ahead, traders and market participants will be closely monitoring the responses from the SEC and CFTC to Ondo's proposals and the broader regulatory discussions surrounding onchain derivatives. Key areas to watch include any proposed rule changes, the outcome of the SEC's review of its transfer agent framework, and further inter-agency coordination between the SEC and CFTC. Any definitive steps towards clarifying the regulatory pathway for stock perpetuals onshore will be a significant signal for the future of RWA integration in US markets.
Source: Cointelegraph. Summarized and rewritten by the Vexoda Newsroom. This is market news, not financial advice.