Ondo Finance has opened a way for approved institutions to convert stocks and exchange-traded funds directly into their tokenized equivalents, or redeem those tokens back into the underlying shares, without putting up separate cash for each mint.
Under the new in-kind system, an institution transfers shares from its Alpaca account to Ondo through an internal book transfer. Corresponding Ondo Stocks tokens are then issued onchain. The process also runs in reverse, letting institutions redeem tokens for the underlying securities when they want to exit.
The change matters because of how Ondo’s existing system works. Under the cash-funded model, an institution that already holds the underlying shares still has to provide fresh cash to mint the matching tokens. That ties up capital twice: once in the shares, once in the minting money. The in-kind route removes the second requirement, which Ondo says can cut financing costs and reduce timing mismatches between traditional share positions and their tokenized mirrors.
Who can use it
Access is narrow for now. Conversions are live on Ethereum and BNB Chain, and only institutional clients approved by Alpaca can participate. Participants need active accounts with both Alpaca and Ondo. Retail investors are not in scope, which keeps the system inside a controlled circle of professional market participants while the mechanics get tested.
The design resembles how ETF creation and redemption works in traditional markets. Authorized participants deliver a basket of underlying securities to a fund and receive fund shares in return, a process that keeps ETF prices aligned with the value of their holdings. Ondo is importing that same in-kind logic to tokenized equities, which could make the onchain versions track their underlying stocks more tightly than cash-minted tokens do.
Ondo’s place in the tokenization market
Ondo has grown into one of the largest tokenization platforms by onchain value. Data from RWA.xyz shows about $3.63 billion in distributed assets across 441 products, ranking it second behind Securitize. The platform started with tokenized US Treasuries and has expanded into tokenized stocks and ETFs as demand for onchain versions of traditional assets picked up through 2026.
The tokenized equity market itself is still small next to stablecoins and tokenized Treasuries, but it is growing on several fronts at once. Robinhood has built a tokenized stock book on its own chain, with Standard Chartered analysts noting the platform is nearing $1 billion in total value locked. Securitize and Superstate issue tokenized funds and equities for institutional clients. Lenders are starting to accept these tokens as loan collateral, with Arch Lending saying this week it plans to extend credit against tokenized equities after launching loans backed by tokenized gold.
| Platform | Onchain value | Products |
|---|---|---|
| Securitize | Largest by RWA.xyz ranking | Funds, equities |
| Ondo Finance | About $3.63 billion | 441 products |
| Robinhood Chain | Nearing $1 billion TVL | Tokenized stocks |
Why in-kind matters for liquidity
Tokenized markets have a recurring problem: the onchain supply of a tokenized stock depends on someone being willing to lock up capital to mint it. When minting costs extra cash on top of the shares, arbitrageurs mint less, onchain liquidity thins out, and token prices drift from the underlying stock. In-kind conversion lowers the cost of minting to nearly nothing for institutions that already hold the shares, which should make it easier to keep onchain supply matched to demand.
That mechanism is what keeps traditional ETF prices in line with net asset value. If Ondo’s version works the same way, tokenized stocks on Ethereum and BNB Chain get a built-in price anchor that cash-only minting could not provide. It also gives institutions a cleaner exit: redeem tokens, get shares, no need to sell into onchain liquidity and move the price.
There is a second-order effect too. Cheaper minting means market makers can run tighter two-sided markets on tokenized stocks without worrying that resupplying inventory will cost them financing. Tighter spreads attract more trading, more trading justifies more inventory, and the loop feeds itself. That is the pattern that took crypto perpetual futures from niche to dominant, and tokenized equity venues want the same flywheel.
The broader race for tokenized equities
Ondo’s move lands in a market where every serious player is racing to own the mint-and-redeem layer. Coinbase has pushed for tokenized stock trading in the United States. Kalshi and Coinbase have both filed for US stock perpetual futures. The ECB launched a settlement system for tokenized assets this week, and Canada’s six largest banks announced a joint exploration of tokenized deposits. Traditional finance is building the rails at the same time as crypto-native firms, and the two efforts are starting to overlap.
For Ondo, the in-kind system is a bet that institutions will prefer a platform where their existing custody and brokerage arrangements plug straight into tokenization. Alpaca provides the brokerage leg, Ondo provides the onchain leg, and the book transfer between them is the bridge. Competing platforms require institutions to restructure holdings to use them, which is friction Ondo just removed.
The company did not announce which institutions have signed up or what volumes the in-kind system has processed so far. Those numbers will show whether the market wanted this specific mechanism or whether cash minting was never really the bottleneck. Either way, the plumbing for tokenized equities is getting closer to how traditional securities infrastructure actually works, one mechanism at a time. The next test will be volume: if approved institutions start running book transfers at scale, the cash-minted token supply that dominates today will look thin and expensive by comparison.