Ondo Opens In-Kind Route for Tokenized Stocks With Alpaca

Ondo Finance said Monday that approved institutions can mint and redeem Ondo Stocks by contributing underlying shares instead of cash, adding a second primary-market path beside its existing cash-funded flow. The company announced the in-kind conversion feature in a blog post dated Sept. 21, 2026, and issued a matching press release the same day.

The workflow runs through Alpaca's Instant Tokenization Network, which Ondo described as automating book transfers between brokerage accounts before tokens are issued onchain. When an approved institution requests a mint, it moves shares from its Alpaca account to Ondo's Alpaca account through an internal transfer. Ondo then issues the matching Ondo Stocks tokens on a supported blockchain. Redemption reverses the sequence, returning underlying shares to the institution's Alpaca account when tokens are redeemed.

Ondo framed the change as a liquidity tool rather than a retail product. Institutions that already hold listed shares can convert inventory into onchain tokens without prefunding each mint with cash, which the company said can support tighter spreads and deeper secondary markets for Ondo Stocks. The press release said the integration removes manual approval on each transaction so desks can move between traditional inventory and tokenized positions faster.

Access stays restricted. Ondo said Instant Tokenization Network access is limited to institutions Alpaca approves case by case, and that it is not a generally available Ondo Stocks feature. Interested firms must hold active accounts with both Ondo and Alpaca and complete separate onboarding. Conversions are live on Ethereum and BNB Chain, according to the company's post.

Alpaca operates the brokerage rails underneath the product. The broker launched Instant Tokenization Network in October 2025 to let institutions mint and redeem tokenized equities against shares held in brokerage accounts outside regular market hours. Cointelegraph reported Monday that the in-kind route sits alongside Ondo's earlier cash-funded minting process and that only Alpaca-approved institutions can use it.

The launch lands as tokenized U.S. equities draw more infrastructure spending. Alpaca raised $135 million in July 2026 to expand tokenized stock services, according to industry press coverage tied to the broker's infrastructure push. Ondo's Monday update ties its token supply more directly to share inventory held at the broker rather than to cash subscriptions alone.

Neither Ondo nor Alpaca disclosed which institutions have activated the in-kind route on day one. The public materials describe eligibility rules, supported chains, and the transfer mechanics, but not volume targets or a list of launch participants. For markets that track Ondo Stocks onchain, the practical test is whether approved market makers use the new path to add or redeem inventory when secondary prices drift from the underlying listings.

The company did not say in its Sept. 21 post whether additional networks would follow Ethereum and BNB Chain. It also did not specify which tokenized tickers are eligible for in-kind conversion beyond referring to Ondo Stocks tokens tied to underlying stocks and ETFs. Institutions seeking access were directed to contact Ondo and Alpaca directly to request activation.

Cash-funded minting remains available for institutions that prefer to subscribe with dollars rather than move share inventory. Ondo's blog contrasted the two paths: cash flows fund new token supply from the treasury side, while in-kind flows mirror inventory already held in street name at Alpaca. That distinction matters for desks that hedge listed equities in one book and tokenized equivalents in another, because the in-kind route reduces the need to raise cash before every mint.

Regulatory treatment of tokenized U.S. equities is still evolving, and Ondo's materials describe the product as infrastructure for approved institutions rather than a retail swap between a brokerage app and a wallet. Alpaca's Instant Tokenization Network paperwork, referenced in Ondo's announcement, is where eligibility and compliance checks sit before any shares move between accounts. Neither company published fee schedules for in-kind conversions in the Sept. 21 materials reviewed here.

Secondary traders who are not approved for the network still interact with Ondo Stocks tokens that may have been created through either funding path. Ondo said the in-kind feature is aimed at primary-market participants who can improve liquidity by converting inventory when spreads widen. Whether that shows up in onchain volume data will depend on how many Alpaca-approved desks activate the workflow and how often they use it versus cash mints.