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

Key Highlights

• Ondo Finance introduced an in-kind stock conversion mechanism enabling qualified institutions to tokenize actual shares without cash deposits
• The feature operates on Ethereum and BNB Chain via Alpaca’s Instant Tokenization Network
• Institutions no longer need to provide separate cash funding to create tokenized positions
• As of September 22, Ondo manages $3.63 billion in distributed assets spanning 441 products
• Only institutions vetted and approved by Alpaca individually can access this service

[[LINK_START_0]]Ondo Finance[[LINK_END_0]] rolled out a direct conversion mechanism on September 21 that allows qualified institutional clients to transform physical stock and ETF holdings into blockchain-based tokenized equivalents. The functionality is available on Ethereum and BNB Chain networks.

Previously, institutions utilizing Ondo’s cash-based minting system were required to deposit additional capital to create tokenized securities, regardless of whether they possessed the actual underlying shares. This new pathway eliminates that requirement.

Conversion Mechanism Explained

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

The mechanism operates bidirectionally. Token holders can burn their digital assets and receive the corresponding physical shares directly into their Alpaca brokerage accounts.

According to Ondo, eliminating the additional cash requirement may decrease financing expenses and minimize timing discrepancies for market makers overseeing tokenized asset inventories.

The platform provider suggested this development might result in narrower bid-ask spreads and enhanced liquidity in secondary trading venues, although no external verification or supporting metrics were released alongside the announcement.

Qualification Requirements

Access to the in-kind conversion pathway is restricted to institutions that receive individual approval from Alpaca. Applicants must maintain active accounts with both Ondo and Alpaca before the service becomes operational.

This addition does not modify existing arrangements for standard Ondo Stocks users. Ondo Stocks continue to be available exclusively to qualified non-U.S. individuals and remain unavailable to U.S.-based participants through conventional channels.

Both Ondo and Alpaca clarify that tokenized securities offer economic exposure to referenced assets but do not constitute direct equity ownership in underlying companies unless explicitly structured to do so.

The in-kind system provides a distinct pathway for approved institutions, who maintain the ability to redeem digital tokens and receive physical shares through the Alpaca brokerage infrastructure.

Ondo’s tokenized securities offering encompasses over 450 products, including U.S. equities and exchange-traded funds. The in-kind conversion feature currently operates on Ethereum and BNB Chain, with Solana notably absent from the September 21 release.

Network Statistics

According to RWA.xyz tracking data, Ondo recorded $3.63 billion in distributed asset value across 441 distinct products and 485,296 holder addresses on September 22. Monthly transfer activity reached $1.58 billion.

The company announced in May that its tokenized equity platform surpassed $1 billion in total value locked following its September 2025 debut. Aggregate trading volume exceeded $20 billion by June 2026.

Asset distribution has expanded throughout exchanges, digital wallets, and decentralized finance platforms. MetaMask incorporated over 200 Ondo tokenized U.S. equities and ETFs earlier this year. The platform also expanded tokenized asset availability to Hyperliquid’s HyperEVM, supporting 35 assets through that channel.

On September 17, the Securities and Exchange Commission published a temporary regulatory framework for tokenized securities platforms. Ondo has not clarified whether the Alpaca in-kind conversion operates within that exemption structure.

On September 16, the Depository Trust & Clearing Corporation announced that Ondo’s subsidiary Oasis Pro Markets became the inaugural tokenization platform to join Fund/SERV membership.