Ondo Lets Institutions Convert Alpaca-Held Shares Into Tokens and Back

Key Facts

Ondo Finance now allows approved institutions to convert U.S. stocks and ETFs held at Alpaca into corresponding Ondo Stocks tokens and redeem those tokens for the underlying assets. The route operates through Alpaca’s Instant Tokenization Network on Ethereum and BNB Chain, and requires active accounts and completed approvals with both firms.

For a mint, Alpaca transfers shares by book entry from the institution’s account to Ondo’s account at the broker, after which Ondo issues the corresponding tokens to the institution’s onchain wallet. The reverse process returns the underlying shares to the institution’s Alpaca account; the shares therefore move inside the broker’s system while the tokens move onchain.

The mechanism replaces a sale of the shares and a separately funded token purchase with an in-kind transfer of the same asset. Ondo says the previous cash-funded route could require liquidity providers to source additional cash and create a timing mismatch between share inventory and tokenized positions. In-kind conversion may therefore help market makers replenish token inventory and manage exposure more efficiently, supporting deeper trading and narrower spreads.

Alpaca cautions that tokenized assets do not represent direct ownership in the underlying company; they generally provide economic exposure to its shares and remain subject to eligibility and geographic restrictions. Ethereum’s role as one of two issuance networks also does not by itself establish a direct effect on ETH’s price. The more immediate market consequence will depend on institutional use of the mint-and-redeem route and the liquidity that reaches Ondo Stocks’ secondary markets.