Key Takeaways:
- The SEC Crypto Task Force, led by Commissioner Hester Peirce, met on April 24 with Ondo Finance and Davis Polk & Wardwell to discuss tokenized securities and compliance frameworks.
- Ondo Finance, having donated $1 million to former President Trump’s inauguration fund, outlined proposals for registration requirements, broker-dealer obligations, and a regulatory sandbox.
- Davis Polk announced representation of Truth Social in launching crypto-linked ETFs, signaling broader industry interest in tokenized financial products.
- The engagement follows the swearing-in of Trump appointee Paul Atkins as SEC chair on April 21, whose stance on crypto enforcement remains to be clarified.
- On April 25, the Task Force will convene a roundtable on crypto custody, featuring Kraken, Anchorage Digital Bank, WisdomTree, and others.
The United States Securities and Exchange Commission (SEC) has intensified its outreach to the digital asset industry through its Crypto Asset Task Force. Under the leadership of Commissioner Hester M. Peirce, the Task Force has systematically engaged market participants to explore frameworks for regulating tokenized financial instruments. On April 24, 2025, the Task Force sat down with representatives from Ondo Finance and the law firm Davis Polk & Wardwell LLP—both of which have known ties to former President Donald Trump—to deliberate on “issuing and selling wrapped, tokenized versions of publicly traded U.S. securities”. This meeting marks a continuation of the Task Force’s dialogue-oriented approach to crafting crypto policy, even as leadership at the SEC transitions under President Trump’s appointee, Paul Atkins.
1. Background of the SEC Crypto Asset Task Force
1.1 Formation and Mandate
In October 2021, the SEC established the Crypto Asset Task Force to concentrate enforcement resources on digital asset markets, assess regulatory gaps, and develop recommendations for legislative and rulemaking actions. The Task Force has since brought a series of high-profile enforcement actions against major exchanges and DeFi protocols, while also seeking industry input on constructive regulatory models.
1.2 Leadership Transition
Former SEC Chair Gary Gensler departed in early April 2025, making way for Paul Atkins—nominated by President Trump—to assume leadership on April 21, 2025. As a past Commissioner under President George W. Bush, Atkins’s regulatory philosophy is anticipated to differ from that of his predecessors, but specifics on his crypto agenda have not yet been articulated to the public.
2. The April 24 Meeting: Ondo Finance and Davis Polk
2.1 Ondo Finance’s Profile
Ondo Finance is a digital asset platform specializing in tokenized fixed-income products. In a notable political linkage, Ondo donated $1 million to Donald Trump’s 2017 inauguration fund. The company has since pursued U.S. Treasury-backed stablecoins and tokenized securities products, recently achieving a market capitalization exceeding $3 billion following its announcement of SEC talks.
2.2 Discussion Agenda
According to the SEC’s notice, the meeting addressed:
- Registration Requirements: Examining how tokenized versions of U.S. equities could qualify under existing securities laws.
- Broker-Dealer Obligations: Clarifying whether issuers or platforms would need broker-dealer registration to facilitate tokenized asset transactions.
- Financial Crimes Compliance: Ensuring adherence to anti-money laundering (AML) and know-your-customer (KYC) rules.
- Regulatory Sandbox Proposals: Exploring a controlled environment for testing innovative tokenization models without full compliance burdens.
2.3 Davis Polk’s Involvement
Davis Polk & Wardwell LLP, a leading securities law firm, announced on April 22 that it would represent Truth Social—former President Trump’s social media venture—in launching crypto-linked exchange-traded funds (ETFs). The firm’s participation underscores growing institutional interest in crypto derivatives and tokenized ETF structures.
3. Political Implications of the Engagement
3.1 Trump Ties in Crypto Dialogue
The optics of engaging Trump-associated entities have drawn attention in Washington. Ondo’s prior political contributions and Davis Polk’s representation of Truth Social create an intersection between digital asset regulation and partisan politics. While SEC policy is designed to be nonpartisan, these associations may heighten scrutiny over the Task Force’s impartiality.
3.2 Regulatory Neutrality vs. Innovation
Critics argue that regulatory bodies must remain neutral to foster innovation, regardless of a firm’s political affiliations. Proponents maintain that structured dialogues with pioneering firms—irrespective of their backgrounds—are necessary to develop effective oversight mechanisms that balance investor protection with technological advancement.
4. Continuing Outreach: April 25 Custody Roundtable
4.1 Agenda and Panelists
Building on the April 24 discussions, the Task Force will host a public roundtable on April 25 to tackle custody challenges in digital asset markets. Panelists include representatives from:
- Kraken
- Anchorage Digital Bank
- WisdomTree
- Additional service providers.
This event, titled “Know Your Custodian: Key Considerations for Crypto Custody,” aims to dissect the unique risks of safeguarding tokenized assets and propose best practices for regulated custodians.
4.2 Custody Demand Surge
Since the U.S. approval of spot Bitcoin and Ethereum ETFs in late 2024, institutional demand for qualified crypto custody has surged. Traditional custodians and banks are exploring partnerships or internal builds to service this growing market, motivating the SEC’s focus on custody standards.
5. Enforcement Philosophy under Chair Atkins
5.1 Continued Fraud Litigation
The SEC has stated its intent to pursue cases involving fraudulent activity. On April 21, the Commission dropped a complaint against Hex founder Richard Heart, signaling selective enforcement review under the new leadership.
5.2 Pausing Broader Investigations
Simultaneously, the SEC announced it will halt investigations or lawsuits against established exchanges such as Ripple, Coinbase, and Kraken—each of which has had Trump-affiliated contributions or executive support ⎯ a move that could reshape the enforcement landscape for major market players.
6. Industry Reaction and Next Steps
6.1 Market Response
Ondo Finance’s token price jumped 7.5% within hours of announcing the SEC meeting, briefly surpassing $1 and propelling its market cap past $3 billion. This market rally reflects investor optimism about potential regulatory clarity.
6.2 Stakeholder Expectations
Industry stakeholders anticipate that the Task Force will publish staff white papers or recommend rule changes addressing tokenized securities, broker-dealer exemptions, and sandbox frameworks. Such guidance could unlock broader capital inflow into tokenized financial instruments.
6.3 Legislative Outlook
Congressional lawmakers have introduced various tokenization bills in recent sessions, seeking to delineate SEC and CFTC jurisdiction over digital assets. The Task Force’s findings may inform legislative amendments to the Securities Act and Exchange Act.
The SEC Crypto Asset Task Force’s engagement with Ondo Finance and Davis Polk & Wardwell on April 24 represents a continued commitment to collaborative policymaking in the digital asset sphere. Under Commissioner Hester Peirce’s leadership—and now with Paul Atkins at the helm—the SEC appears poised to refine its approach to tokenized securities, custody standards, and enforcement priorities. The forthcoming April 25 roundtable on crypto custody will further define best practices for safeguarding digital assets, addressing a critical need amid rising institutional participation. As regulatory and industry participants digest these developments, the evolution of U.S. crypto policy promises to balance innovation with investor protection, shaping the future of tokenized finance.
