Key Highlights
- Ondo Finance introduced a direct conversion mechanism enabling qualified institutions to tokenize stocks using their existing share holdings rather than cash deposits
- The service operates on Ethereum and BNB Chain networks via Alpaca’s Instant Tokenization Network infrastructure
- This innovation eliminates the requirement for additional cash funding during the token minting process
- As of September 22, Ondo manages $3.63 billion in distributed assets spanning 441 distinct products
- Eligibility for the service is determined by Alpaca through individual institutional review
Ondo Finance has introduced an innovative conversion mechanism that allows qualified institutional participants to transform their existing stock and ETF holdings into blockchain-based tokenized equivalents. The service became operational on September 21 across Ethereum and BNB Chain networks.
Previously, institutions utilizing Ondo’s traditional cash-based methodology were required to submit additional capital to create tokenized stock positions, regardless of whether they possessed the corresponding physical shares. This new direct conversion pathway eliminates that intermediate requirement.
Mechanics of the Direct Conversion System
A qualified institutional participant initiates the process by moving shares from their personal Alpaca brokerage account into Ondo’s designated Alpaca account via an internal ledger transfer. Following this transfer, Ondo generates the corresponding tokenized asset on a compatible blockchain network.
The mechanism functions bidirectionally as well. Institutional clients can burn their tokenized holdings and recover the physical shares directly into their Alpaca brokerage accounts.
According to Ondo, eliminating the intermediate cash requirement may decrease funding expenses and minimize temporal discrepancies for market makers who oversee tokenized asset inventories.
The firm also suggested this modification might result in narrower bid-ask spreads and enhanced liquidity depth in secondary trading venues, although no independent verification data was made available at the time of launch.
Qualification Requirements and Access
Participation in the new direct conversion system is limited to institutions that receive individual approval from Alpaca following case-specific evaluation. Candidates must maintain operational accounts with both Ondo and Alpaca prior to service activation.
This enhancement does not affect existing Ondo Stocks token holders in any way. Ondo Stocks continue to be accessible exclusively to qualified non-U.S. individuals and remain unavailable to U.S.-based users through conventional platform channels.
Both Ondo and Alpaca emphasize that tokenized securities offer economic exposure to the underlying assets but do not constitute direct equity ownership in the referenced companies unless explicitly structured otherwise.
The in-kind conversion pathway establishes a special provision for authorized institutions, enabling them to redeem tokens and obtain physical shares through Alpaca’s brokerage system.
Ondo’s tokenized securities infrastructure encompasses over 450 different products, including various U.S. equities and exchange-traded funds. The direct conversion service currently functions on Ethereum and BNB Chain networks, while Solana was notably absent from the September 21 launch announcement.
Platform Metrics and Growth
According to RWA.xyz statistics, Ondo had accumulated $3.63 billion in total distributed asset value spread across 441 products and 485,296 holder addresses as of September 22. Monthly transaction volume reached $1.58 billion during this period.
In May, Ondo announced its tokenized securities platform had surpassed $1 billion in total value locked following its initial launch in September 2025. By June 2026, aggregate trading volume had exceeded $20 billion.
The platform’s reach has expanded significantly across multiple exchanges, digital wallets, and decentralized finance protocols. Earlier in 2026, MetaMask incorporated over 200 Ondo tokenized U.S. equities and ETFs into its interface. Ondo additionally deployed tokenized assets onto Hyperliquid’s HyperEVM environment, with 35 different assets accessible through that partnership.
On September 17, the Securities and Exchange Commission released a provisional regulatory framework for tokenized securities platforms. Ondo has not publicly confirmed whether the Alpaca in-kind conversion service falls under this exemption.
On September 16, DTCC announced that Oasis Pro Markets, an Ondo subsidiary, had joined Fund/SERV as the organization’s inaugural tokenization-platform participant.
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