Finance21 September, 20262 min read
Ondo Finance Launches In-Kind Conversion With Alpaca Instant Tokenization Network
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Approved institutions can mint and redeem Ondo Stocks using existing shares via Alpaca. In-kind conversion transfers shares from Alpaca to Ondo, tokens issued on-chain.
In-kind minting route
Ondo Finance introduced an in-kind pathway that lets approved institutions convert equity holdings they already own into Ondo Stocks tokens without liquidating positions or converting them to cash first. Ondo Finance built the mechanism with broker-dealer Alpaca and routed it through Alpaca's Instant Tokenization Network (ITN), where an institution that cleared Alpaca's approval process can transfer underlying shares from its Alpaca account to Ondo's Alpaca account through an internal book transfer. Ondo Finance then issued corresponding tokens on a supported blockchain after the transfer completed, with Ethereum and BNB Chain supported for token issuance.
Ondo Finance described redemption as working in reverse, with tokens burned and the underlying shares returned to the institution's Alpaca account. Ondo Finance said access to the mechanism is deliberately narrow, with eligibility limited to institutions approved by Alpaca on a case-by-case basis and ITN not described as a generally available Ondo Stocks feature.
Spot conversions and eligibility
Ondo Finance said its feature enables institutional investors to directly convert existing shares they hold into tokenized stocks, and it also supports spot conversions among underlying shares, tokenized stocks, and exchange-traded funds through integration with Alpaca's Instant Tokenization Network (ITN). Ondo Finance stated that if an approved institution transfers shares from its Alpaca account to an Ondo account, Ondo Stocks tokens corresponding to those shares are issued, and when the tokens are redeemed the underlying shares are returned to the institution's Alpaca account. Ondo Finance said the feature is available only to institutions that maintain accounts with both Ondo and Alpaca and have received separate approval.
Ondo Finance said the new route adds to its existing cash-funded model, where an institution holding underlying shares still must provide separate cash to mint the corresponding tokens under the cash-funded system. Ondo Finance said the integration automates the conversion process, removing the need for manual approval on each transaction and allowing institutions to move quickly between traditional share inventory and on-chain positions.
Liquidity goals and scale
Ondo Finance said the in-kind conversion is intended to reduce cash burdens and expand liquidity and market depth for Ondo Stocks, positioning the new route as a capital-efficient way for institutions to supply liquidity across secondary markets. Ondo Finance said Ondo Stocks connects tokenized stocks and ETFs to the liquidity of traditional markets, including Nasdaq and NYSE, through a just-in-time minting and redemption model. Ondo Finance said the addition of in-kind conversion supports tighter spreads and deeper liquidity for Ondo Stocks across secondary markets, and it described the change as making it easier for market makers to replenish token inventory.
RWA.xyz data cited by Cointelegraph placed Ondo as a major tokenization platform, showing about $3.63 billion in distributed assets across 441 products and ranking it second behind Securitize. Ondo Finance said the gated structure serves regulatory and operational purposes by restricting minting to approved institutions so it can apply know-your-customer and anti-money-laundering checks at the point of token creation.