Ondo unlocks BlackRock portfolio strategies, but only non-US traders benefit

Ondo Finance launched three on-chain portfolio tokens on Sept. 24 using investment strategies BlackRock developed for the company. The tokens give buyers economic exposure to diversified baskets, but they are securities issued by Ondo, not interests in BlackRock funds.

Only eligible non-US investors who complete onboarding can redeem the tokens directly with Ondo, according to its launch release and product terms.

The first three products are Ondo High Income (BLKHIon), Ondo Diversified Growth (BLKDIGon) and Ondo High Growth (BLKGRWon). They draw on portfolio strategies BlackRock developed for Ondo, and Ondo implements the allocations using tokenized assets and rebalances the portfolios on a preset schedule, the company said in its launch explanation.

Holding a portfolio token gives economic exposure to a weighted basket that includes Ondo Stocks, which track equities and exchange-traded funds. It does not give the holder a right to the underlying funds or securities.

Ondo's legal disclosure calls each token a separate security issued by Ondo Global Markets (BVI) Limited.

BlackRock Fund Advisors supplies model allocations to Ondo but does not make investment decisions for the on-chain portfolios. Ondo decides how to implement the models and manages, sponsors, and administers the products.

BlackRock does not manage the portfolios or owe advisory or fiduciary duties to token investors, and the company is generally not required to update its model after delivery. Ondo decides whether to apply any changes, so an on-chain portfolio may differ from the corresponding model.

Strategy for BlackRock onboarding

Ondo's FAQ says direct minting and redemption require an eligible person outside the US to complete identity and anti-money-laundering checks.

The process also screens for US-person status, restricted jurisdictions, and prohibited persons. Ondo processes redemptions only for eligible holders who have completed onboarding.

A person may still receive or hold a portfolio token without completing that process because the tokens are transferable on-chain, subject to jurisdictional and other restrictions. Possession alone does not qualify the holder to redeem with Ondo.

The ability to move a token between wallets is therefore distinct from eligibility to redeem it with the issuer.

Ondo describes peer-to-peer transfers as available around the clock, including through supported third-party platforms. That capability does not show that a buyer will be available at a given price or that a holder can exit immediately.

Anyone unable to redeem directly would depend on a third party willing to take the token, subject to that venue's rules and market conditions.