Key Highlights
- Ondo now lets approved institutions use existing shares to mint tokenized stocks and ETFs onchain.
- The in-kind conversion feature is live on Ethereum and BNB Chain through Alpaca’s Instant Tokenization Network.
- Ondo says the feature could improve liquidity by supporting tighter spreads and deeper markets for Ondo Stocks.
Ondo Finance, a decentralized finance platform, has launched a new way for approved institutions to turn shares they already own into tokenized stocks and ETFs on-chain.
In an announcement on Monday, September 21, the company said the feature works through Ondo Stocks and Alpaca’s Instant Tokenization Network, allowing institutions to mint and redeem tokenized assets on Ethereum and BNB Chain.
The system gives institutions another way to create Ondo Stocks without first providing cash. Instead, they can use shares already held in their Alpaca accounts. Those shares can be transferred into Ondo’s system and used to mint the matching tokenized stocks.
When an institution wants its shares back, it can redeem the tokens and receive the underlying shares.
“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, supporting tighter spreads and deeper liquidity. “ the firm said on X.
Institutions can use shares they already own
Ondo said the new feature supports “in-kind conversion”, meaning the shares themselves are used in the conversion instead of cash. This adds another route alongside Ondo Stocks’ existing cash-funded process.
When an institution asks to mint Ondo Stocks, the underlying shares are moved from its Alpaca account to Ondo’s Alpaca account through an internal book transfer. The matching Ondo Stocks tokens are then issued on the selected blockchain.
The reverse process happens when an institution wants to redeem its tokens. The institution returns the Ondo Stocks tokens and receives the matching underlying shares in its Alpaca account.
Access is limited to approved institutions
The feature is not open to everyone. Access is limited to institutions approved by Alpaca, with approval handled on a case-by-case basis. Institutions also need active accounts with both Ondo and Alpaca and must complete the required onboarding process before using the service.
Ondo said the main goal is to make it easier for institutions to use shares they already own as a source of onchain liquidity. Under the cash-funded model, an institution holding the underlying shares would still need to find separate cash to create the tokenized version. That can add extra costs and create a delay between holding the shares and getting the tokenized assets.
The new system removes that step by allowing institutions to use their existing share holdings directly in the tokenization process. Ondo said this could help market makers replace token inventory, manage their positions, and react to demand across different trading venues.
The company said the change can support tighter spreads and deeper liquidity for Ondo Stocks across secondary markets. In practice, the feature gives institutions another way to supply tokenized assets without setting aside additional cash to mint new tokens.
Ondo builds on its tokenized securities push
The launch is part of Ondo’s wider push into tokenized securities. In July, its SEC-registered broker-dealer subsidiary, Oasis Pro Markets, received SEC and FINRA authorization to offer tokenized equities and funds to U.S. investors.
The authorization covered OTC retailing, primary offerings, private placements, and secondary trading.
Before that, Ondo had also asked the SEC to consider tokenized securities and blockchain-based trading when reviewing U.S. equity market rules. The company supported removing Rules 611 and 610(e) of Regulation NMS but said any new framework should also account for tokenized securities and other ways of trading.
The latest launch adds another component to that effort. Approved institutions can use shares they already hold to create tokenized versions while retaining a mechanism to convert those tokens back into the underlying shares.
The feature is now live on Ethereum and BNB Chain, giving eligible institutions a new way to move existing share holdings into onchain markets.
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