Ondo Finance Foresees Blockchain-Traditional Finance Fusion, Expands in Asia Pacific
Summary:
US Treasury tokenization protocol Ondo Finance is anticipating the merging of standard finance with blockchain technology, expanding its services accordingly. The protocol has recently established its first base in Hong Kong as it expands its blockchain services to Asia Pacific investors. Ondo Finance CEO, Nathan Allman, extols the benefits of tokenized treasuries over traditional ones, emphasizing the ease of 24/7 on-chain transfers and the potential for investors to benefit from DeFi, among other advantages. Ondo currently has three products that provide exposure to U.S. treasuries, money market funds, and a yield-beating alternative to conventional stablecoins. However, regulatory clarity issues limit these tokenized assets' availability to U.S. investors.
As Ondo Finance, a blockchain treasury protocol from the United States, forecasts the convergence of traditional and blockchain finance in the near future, it diligently broadens its services. Recently, its maiden office was launched in Hong Kong, with the aim of broadening its blockchain treasury services for investors in the Asia Pacific region. In a discussion with Cointelegraph, Ondo Finance CEO, Nathan Allman, declared that there were numerous perks to running tokenized treasuries over merely owning the theoretical treasuries. "Tokenized treasuries can be transferred via blockchain around the clock, with the option for decentralized, centralized exchanges, and over-the-counter transfers", stated Allman. "Additionally, they're compatible with smart contracts, unlike treasuries kept in typical brokerage accounts, paving the path for investors to take advantage of DeFi while enjoying stable yields."
Allman elaborated on Ondo's DeFi protocol, Flux, "This tool is ideal for peer-to-pool lending, as it calculates interest rates algorithmically, and eliminates the need for intermediaries and other processes."
With three products under its belt, Ondo is making waves in the finance industry. OUSG provides access to U.S. Treasuries, OMMF offers exposure to U.S. money market funds, and USDY acts as a profitable alternative to conventional stablecoins, with a focus on short-term treasuries and bank deposits. In total, these pools are reportedly valued at approximately $186 million and generate an annual yield of roughly 5%. The U.S. Treasuries, which form the bedrock of these assets, are guaranteed by the U.S. government, with revenue streams from areas such as corporate taxes and income tax covering the interest expenses.
Allman also highlighted their future plans, "Cash equivalents are only the first stage. In the near future, we plan to introduce the remaining $100T+ of securities to the blockchain," He added, "Also, we are brainstorming solutions to overcome fundamental challenges related to infrastructure in order to speed up the widescale creation and usage of tokenized securities on public blockchain platforms."
At present, Ondo's tokenized assets are not accessible to United States investors due to unclear regulations in the country. International users interested in investing in Ondo's treasury pools must fulfill a Know Your Customer and Anti-Money Laundering check and are required to hold the tokenized assets for a minimum of 40 days before transfer. Noting the absence of specific regulations for tokenized assets, Allman remarked, "Based on the current structure of products for tokenization, existing norms outside the U.S. should adequately regulate them."
Hong Kong, where Ondo's first office is based, exhibits a welcoming stance towards firms that tokenize real-world assets. In a February letter, the Hong Kong Monetary Authority outlined several principles for tokenization firms, including governance, risk management, asset segregation, disclosure, and anti-money laundering. These regulations are expected to come into force by August.
Related: Protocols About Real-World Assets are Outperforming DeFi Blue Chips Due to Tokenization Wave
Published At
2/22/2024 6:38:51 PM
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