Ondo Finance has opened a new institutional pathway that lets approved firms turn conventional equity holdings into blockchain-based stock tokens without first selling those positions for cash.
The update, announced on September 21, 2026, adds an in-kind conversion option to Ondo Stocks, the company’s tokenized US equities and ETF platform.
Until now, institutions that already owned the relevant shares still had to put up separate cash to mint matching Ondo Stocks tokens.
That extra funding step created financing costs and timing gaps between traditional inventory and on-chain positions.
The new route removes that friction.
Eligible institutions can contribute the shares they already hold and receive the corresponding tokens, or send tokens back and receive the underlying shares.
The mechanics run through Alpaca’s Instant Tokenization Network.
When an approved firm requests a mint, the shares move from its Alpaca brokerage account to Ondo’s Alpaca account via an internal book transfer.
Tokens are then issued on the supported chain.
Redemption works in reverse: tokens are surrendered and the shares return to the institution’s Alpaca account.
The process is designed to run without a manual approval on every transaction, so firms can shift inventory more quickly between traditional and tokenized form.
Access is tightly controlled.
The feature is available only to institutions approved case by case by Alpaca.
Participants must maintain active accounts with both Ondo and Alpaca and complete the required onboarding.
Interested firms need to contact both companies to request activation.
Conversions are live on Ethereum and BNB Chain.
Ondo has made clear that this Instant Tokenization Network capability is not a general-availability product for all Ondo Stocks users.
The company argues the change should help market makers and other liquidity providers operate more efficiently.
By converting existing share inventory directly into on-chain supply, institutions can support tighter spreads and deeper secondary-market liquidity for Ondo Stocks across exchanges, wallets, and DeFi venues that list the tokens.
The cash-funded mint-and-redeem path remains available; in-kind conversion simply sits alongside it as an additional primary-market route.
Ondo Stocks tokens are fully backed by the corresponding US stocks and ETFs held through regulated broker-dealers.
They are structured as total-return instruments that track the economic performance of the underlying securities, including dividend reinvestment after applicable withholding.
Ordinary token holders do not receive direct legal ownership of the shares; the in-kind facility is an institutional primary-market tool rather than a change in the rights of secondary market token holders.
The launch fits a broader push to make tokenized equities more usable for professional capital.
Ondo has become one of the largest platforms in the category by on-chain value, with a large catalog of US stocks and ETFs already trading across multiple chains.
Connecting traditional share inventory more directly to those tokens is meant to reduce operational drag for the institutions that supply liquidity.
Jurisdictional limits still apply.
The tokens and related services remain subject to securities rules and are not available in every market. Firms that want to use the new conversion path must satisfy both Ondo’s and Alpaca’s compliance requirements.
