Ondo lets institutions convert stocks directly into tokenized shares

Ondo has launched a novel in-kind conversion system that enables approved institutions to convert stocks and ETFs directly into their tokenized equivalents, or redeem the tokens for the underlying shares. This new process allows institutions to transfer shares from their Alpaca accounts to Ondo, resulting in the issuance of corresponding Ondo Stocks tokens onchain. The reverse process also functions, enabling institutions to redeem the tokens for the original shares.

This in-kind option complements Ondo's existing cash-funded model, where institutions still need to provide separate cash to mint the corresponding tokens when they already hold the underlying shares. By using the shares themselves, the new route may reduce the additional capital required to create tokenized inventory. Furthermore, the conversions could potentially lower financing costs and eliminate timing mismatches between traditional shares and tokenized positions.

Currently, the conversions are available on Ethereum and BNB Chain, and they are restricted to institutional clients who are approved by Alpaca. These participants must have active accounts with both Alpaca and Ondo. Ondo has become one of the largest tokenization platforms by onchain value, with approximately $3.63 billion in distributed assets across 441 products, placing it second behind Securitize according to RWA.xyz data.