Ondo Finance has added in-kind conversion to Ondo Stocks, allowing approved institutions to exchange existing shares for tokenized stocks and ETFs without first raising separate cash. The capability, enabled through Alpaca’s Instant Tokenization Network (ITN), creates another primary-market route for bringing traditional equity inventory onchain.

Ondo Finance is expanding the institutional infrastructure behind tokenized equities with a new in-kind conversion capability for Ondo Stocks. The integration with Alpaca’s Instant Tokenization Network allows eligible institutions to use shares they already hold to mint corresponding tokenized stocks and ETFs, or redeem those tokens back into the underlying shares.

The move addresses a practical constraint in tokenized securities markets: institutions can hold the underlying securities but may still need separate cash to create tokenized positions. Ondo’s new flow is designed to remove that additional funding step.

Under the new model, an approved institution transfers underlying shares from its Alpaca account to an Ondo Alpaca account through an internal book transfer. Ondo Stocks tokens are then issued on a supported blockchain. The redemption process works in reverse, with tokens exchanged for the corresponding underlying shares and returned to the institution’s Alpaca account.

The conversion process is automated rather than requiring manual approval for every transaction. However, access remains restricted. Institutions must be approved by Alpaca on a case-by-case basis, maintain active accounts with both Ondo and Alpaca, and complete the applicable onboarding requirements. The ITN functionality is not a generally available feature for all Ondo Stocks users.

Conversions are currently live on Ethereum and BNB Chain.

The significance of the integration lies less in token issuance itself than in how it could affect liquidity. Ondo Stocks uses a just-in-time minting and redemption model that connects tokenized assets with liquidity in traditional equity markets, including Nasdaq and the New York Stock Exchange. The in-kind route gives institutions another mechanism for replenishing token inventories when demand develops in secondary markets.

For market makers, that can reduce the financing and timing friction associated with the existing cash-funded process. An institution holding shares no longer needs to source additional cash simply to create a corresponding tokenized position. In theory, that can make existing equity inventory more immediately useful for supplying liquidity across onchain trading venues, wallets and decentralized finance applications.

Alpaca has positioned its ITN as infrastructure for connecting brokerage-held securities with tokenized markets. Its tokenization platform supports in-kind minting and redemption against brokerage-held stocks and is designed to let tokenized-equity liquidity move across different versions of an asset rather than remain isolated in separate liquidity pools.

The development comes as financial institutions and infrastructure providers continue experimenting with blockchain-based representations of traditional securities. McKinsey estimates that tokenized financial assets could reach approximately $2 trillion in market capitalization by 2030, excluding cryptocurrencies and stablecoins, with mutual funds and ETFs among the asset classes it expects to have relatively strong adoption potential.

That market trajectory is still a projection rather than an established outcome. Tokenized securities also face regulatory, custody, interoperability and liquidity challenges. In particular, tokenized representations do not necessarily confer the same legal rights as directly holding the underlying securities. Ondo states that Ondo Stocks provide economic exposure to underlying assets but are not themselves stocks, ETFs or ADRs and do not give holders rights to receive or hold those underlying assets.

Ondo’s approach therefore focuses on connecting two market structures rather than replacing one with the other. Traditional shares remain the backing assets, while blockchain networks provide the infrastructure for issuing and transferring their tokenized representations where permitted.

The company has previously described Ondo Stocks as a platform for tokenized US stocks and ETFs, with Alpaca providing brokerage infrastructure connecting the onchain products with traditional securities markets. In July 2026, Alpaca said Ondo Stocks had expanded to more than 430 tokenized US stocks and ETFs, although those figures were company-reported and have continued to evolve.

The new in-kind mechanism could consequently become an important piece of the market-making layer for tokenized equities. Instead of treating tokenized liquidity as a separate pool that requires additional capital, institutions can potentially use existing securities inventory as a direct source of onchain liquidity.

For the broader digital-assets and banking technology markets, the development illustrates a shift from simply putting financial assets on blockchains toward building infrastructure that connects tokenized markets with existing brokerage, custody and trading systems. The challenge now is whether these connections can scale while maintaining regulatory compliance, reliable settlement and sufficient secondary-market liquidity.

Market Landscape

Tokenized financial assets are moving beyond proof-of-concept deployments toward infrastructure that connects traditional securities with blockchain-based markets. McKinsey estimates tokenized market capitalization could reach about $2 trillion by 2030, excluding cryptocurrencies and stablecoins, with ETFs and mutual funds among the asset classes positioned for adoption.

The competitive landscape includes tokenization infrastructure providers, broker-dealers, digital-asset platforms and traditional financial institutions. Alpaca’s infrastructure supports tokenized US equities, while Ondo is using that brokerage connectivity to build an onchain market for tokenized stocks and ETFs.

Top Insights

• Ondo Stocks can now use existing institutional share inventory for token minting, reducing the need for separate cash funding.
• Alpaca’s ITN connects brokerage-held securities with blockchain-based tokenization and automated in-kind minting and redemption.
• Access remains restricted to institutions approved by Alpaca and onboarded with both Alpaca and Ondo.
• Ethereum and BNB Chain currently support the new conversion mechanism, extending Ondo’s tokenized-equity infrastructure.
• The development highlights a broader shift toward connecting traditional capital-market infrastructure with blockchain-based financial markets.

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