Ondo Finance Introduces Direct Stock-to-Token Conversion for Institutional Clients

Key Highlights

• Ondo Finance introduced a direct conversion mechanism allowing whitelisted institutions to tokenize actual stock holdings without cash funding requirements
• The service operates on Ethereum and BNB Chain via Alpaca’s Instant Tokenization Network
• Institutions can now bypass the traditional cash-based minting process when creating tokenized stock positions
• As of September 22, Ondo manages $3.63 billion in distributed assets spanning 441 different products
• Eligibility is limited to institutions that receive individual approval from Alpaca

Ondo Finance introduced a direct conversion mechanism on September 21 that enables qualified institutions to transform actual stock and ETF holdings into blockchain-based tokenized equivalents. The platform operates on both Ethereum and BNB Chain networks.

Previously, institutions utilizing Ondo’s traditional cash-funded approach needed to deposit separate capital to create tokenized stock positions, regardless of whether they already owned the corresponding securities. The newly introduced in-kind mechanism eliminates this redundant requirement.

Operational Mechanics

Qualified institutions initiate the process by transferring securities from their personal Alpaca brokerage account to Ondo’s designated Alpaca account via an internal book transfer mechanism. Following this transfer, Ondo generates corresponding tokenized representations on the chosen blockchain network.

The mechanism functions bidirectionally. Institutions holding tokenized securities can redeem them to receive the actual underlying shares directly into their Alpaca brokerage accounts.

According to Ondo, eliminating the redundant cash-funding requirement may decrease financing expenses and minimize temporal discrepancies for market makers who manage tokenized asset inventories.

The platform suggested this modification might result in narrower bid-ask spreads and enhanced liquidity in secondary trading venues, although no third-party verification or supporting data was made available at the time of the announcement.

Participation Requirements

Access to the direct conversion mechanism is exclusively available to institutions that receive individual approval from Alpaca through their evaluation process. Eligible participants must maintain active accounts with both Ondo and Alpaca before receiving authorization.

Existing Ondo Stocks users experience no modifications to their current service. Ondo Stocks continue to be accessible exclusively to qualified non-U.S. individuals, with U.S.-based clients remaining ineligible for the standard platform offering.

Both Ondo and Alpaca emphasize that tokenized securities deliver economic exposure to referenced assets but do not constitute direct ownership stakes in the underlying corporations unless explicitly structured otherwise.

The in-kind conversion pathway establishes an exemption for approved institutions, granting them the ability to redeem tokens and retrieve actual securities through Alpaca’s system.

Ondo’s tokenized securities infrastructure encompasses over 450 products, featuring U.S. equities and exchange-traded funds. The in-kind conversion capability presently supports Ethereum and BNB Chain networks, with Solana notably absent from the September 21 launch announcement.

Platform Metrics

According to RWA.xyz statistics, Ondo reported $3.63 billion in distributed asset valuation across 441 products and 485,296 holder addresses as of September 22. Monthly transaction volume reached $1.58 billion.

In May, Ondo announced its tokenized stock infrastructure exceeded $1 billion in total value locked following its September 2025 launch. Aggregate trading volume surpassed $20 billion by June 2026.

The platform has expanded across multiple exchanges, digital wallets, and decentralized finance protocols. MetaMask incorporated over 200 Ondo tokenized U.S. equities and ETFs during 2026. Ondo additionally deployed tokenized assets to Hyperliquid’s HyperEVM platform, supporting 35 assets through that partnership.

The SEC published a temporary regulatory framework for tokenized securities platforms on September 17. Ondo has not publicly confirmed whether the Alpaca in-kind conversion service falls within that exemption framework.

On September 16, DTCC announced that Oasis Pro Markets, an Ondo subsidiary, became Fund/SERV’s inaugural tokenization-platform participant.

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