Ondo Finance announced a new way for institutions to move stocks onchain. Starting September 21, 2026, approved institutions can mint Ondo Stocks using shares they already hold. They no longer need fresh cash to fund every token creation. The feature runs through Alpaca’s Instant Tokenization Network, known as ITN. It adds a second route alongside Ondo’s existing cash-funded minting process. Institutions can also redeem tokens and receive the underlying shares back. Ondo built this system to widen the on-ramp between traditional brokerage accounts and onchain markets. The company frames the update as a step toward tighter spreads and deeper liquidity across its tokenized stock markets.
Introducing a new way to bring shares onchain.
— Ondo Finance (@Ondo) September 21, 2026
Starting today, approved institutions can use shares they already hold to mint Ondo Stocks through Alpaca’s Instant Tokenization Network.
This gives institutions a direct path from existing share inventory to onchain markets,… pic.twitter.com/70VKVGaKnb
How In-Kind Minting and Redemption Works
The mechanism relies on existing brokerage infrastructure rather than new custody arrangements. To mint tokens, an institution transfers underlying shares from its own Alpaca account to Ondo’s Alpaca account. This happens through an internal book transfer, not a public market trade. Once the transfer settles, Ondo issues the matching amount of Ondo Stocks tokens on the supported blockchain. Redemption simply reverses the flow. An institution sends its tokens back, and Ondo returns the corresponding shares to that institution’s Alpaca account. Because the process runs through automated rails, institutions avoid manual approval on every transaction. As a result, they can shift between share inventory and tokenized positions much faster than before.
Why Skipping Cash Funding Matters
Previously, institutions needed cash on hand to mint new Ondo Stocks tokens, even when they already held the underlying shares. That requirement created friction and tied up capital unnecessarily. In-kind conversion removes that step entirely. Institutions can now convert existing inventory straight into tokenized form, without sourcing separate funding. This matters most for market makers and liquidity providers who already hold large equity positions. They can deploy that inventory onchain immediately, instead of waiting on settlement or raising cash separately. Consequently, Ondo expects the change to support tighter spreads and greater depth in secondary trading. Capital efficiency improves because the same shares can move between traditional and onchain venues without idle time in between.
Built on Ondo’s Just-in-Time Liquidity Model
Ondo Stocks operates on what the company calls a just-in-time liquidity model. Instead of relying on standalone onchain liquidity pools, each tokenized stock draws on the liquidity of its underlying exchange listing. That means an Ondo Stocks token tied to a Nasdaq-listed company inherits that stock’s existing market depth. Pool-based tokenization models, by contrast, tend to thin out once they stretch beyond a handful of popular assets. Ondo’s approach avoids that ceiling because liquidity comes from the traditional market itself, not from a fixed onchain reserve. In-kind conversion extends this model further. It gives institutions a second lever, alongside cash funding, to keep primary market supply aligned with real demand. Together, the two funding routes are designed to keep tokenized prices tracking their underlying shares closely.
Alpaca’s Role as Tokenization Infrastructure
Alpaca operates the brokerage rails underneath this entire system. The company launched its Instant Tokenization Network in October 2025, built specifically to let institutions mint and redeem tokenized stocks against brokerage-held shares around the clock. Since then, Alpaca has become a dominant infrastructure layer for the tokenized equity sector. The firm reported clearing or custodying roughly 94% of tokenized U.S. equities, according to its own market share disclosure. That includes products tied to Ondo, Binance, and Dinari, among other platforms. Alpaca also raised $135 million in July 2026 to expand its tokenized stock infrastructure, according to CoinDesk. Access to the in-kind route through ITN stays restricted, however. Only institutions approved by Alpaca on a case-by-case basis can use it, and they need active accounts with both Alpaca and Ondo.
Ondo Stocks’ Growing Footprint
This launch builds on a platform that has scaled quickly since its debut. Ondo Stocks, previously branded Ondo Global Markets, first crossed $1 billion in total value locked in May 2026. The platform now spans more than 440 tokenized U.S. stocks and ETFs across Ethereum, BNB Chain, and Solana. Cumulative trading volume across those markets has topped $20 billion. Ondo remains the largest issuer of tokenized stocks by a wide margin, according to its own reporting and third-party trackers. Every token stays fully backed one-to-one by the underlying security, plus any cash in transit. Adding an in-kind conversion route gives institutional participants another reason to route existing share inventory through Ondo rather than parking it in traditional accounts alone.
What It Means for Tokenized Equity Markets
In-kind conversion signals a maturing phase for tokenized stocks. Early tokenization efforts often relied on simple wrapping mechanisms with limited liquidity support. Ondo’s approach instead ties primary market issuance directly to institutional balance sheets already active in traditional markets. That connection could make tokenized equities behave more like their underlying shares in practice, not just in theory. Tighter spreads and deeper secondary liquidity would benefit any trader accessing these markets, not only the institutions minting tokens directly. For now, the feature remains limited to approved institutional participants. However, infrastructure built for institutions often filters down to broader market structure over time, as spreads tighten and liquidity deepens for everyone trading these instruments.
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