Ondo Finance has introduced a new primary-market route that allows eligible institutions to convert existing stocks and ETFs directly into tokenized assets, removing a key friction point in i
Ondo Finance has introduced a new primary-market route that allows eligible institutions to convert existing stocks and ETFs directly into tokenized assets, removing a key friction point in its earlier model.
Ondo Stocks now supports in-kind conversion between underlying shares and tokenized stocks and ETFs, adding a new primary market route alongside its existing cash-funded flow. The functionality is powered by Ondo Stocks and Alpaca's Instant Tokenization Network (ITN), enabling approved institutions to contribute existing shares to mint corresponding Ondo Stocks tokens, or redeem tokens to receive the underlying shares.
To mint, an approved institution transfers underlying shares from its Alpaca account to Ondo's Alpaca account via an internal book transfer; the corresponding Ondo Stocks tokens are then issued on the supported blockchain. Redemption reverses the process, sending the underlying shares back to the institution's Alpaca account after the tokens are redeemed.
The integration automates the conversion process, removing the need for manual approval on each transaction and allowing institutions to move quickly between traditional share inventory and tokenized positions. Access is limited to institutions approved by Alpaca on a case-by-case basis, and participants need active accounts with both companies before activation.
Under the cash-funded model, an institution holding underlying shares must source separate cash to mint tokens, a step that can introduce financing costs and a timing mismatch between its share inventory and tokenized positions. Direct access to Alpaca's ITN removes that step, making it easier for market makers to replenish token inventory, manage exposure, and respond to demand across trading venues.
The addition allows institutions to convert existing share inventory directly into onchain liquidity, supporting tighter spreads and deeper liquidity for Ondo Stocks across secondary markets. Conversions are live now on Ethereum and $BNB Chain. Ondo Stocks connects tokenized stocks and ETFs to the liquidity of traditional markets, including Nasdaq and NYSE, through a just-in-time minting and redemption model.
The launch adds to Ondo's broader growth in tokenized securities. rwa(.)xyz tracks approximately $3.60 billion in Ondo distributed assets across 441 products. The in-kind conversion launch comes just days after DTCC's Fund/SERV admitted Ondo Finance as its first tokenization-focused member on September 16, 2026, paving the way for Ondo tokenized funds to reach traditional fund distributors already connected to a network that processes more than 85% of U.S. mutual fund transaction activity.
Sources:Ondo Finance official press release via PR NewswireOndo Finance launches in-kind tokenized stock conversion, Crypto.newsDTCC's Fund/SERV adds Ondo Finance as first tokenization member, PR Newswire
