Ondo lets institutions convert stocks directly into tokenized shares

Ondo Finance has introduced a way for eligible institutions to convert stocks and exchange-traded funds directly into their tokenized equivalents, or redeem the tokens for the underlying shares.

Under the new system, approved institutions can transfer shares from their Alpaca accounts to Ondo through an internal book transfer, with corresponding Ondo Stocks tokens then issued onchain. The process also works in reverse, allowing institutions to redeem the tokens for the underlying shares.

The in-kind option adds to Ondo’s existing cash-funded model. Under that system, an institution that already holds the underlying shares must still provide separate cash to mint the corresponding tokens.

The new route allows institutions to use those shares instead, potentially reducing the amount of additional capital needed to create tokenized inventory. Ondo said the change could also reduce financing costs and timing mismatches between traditional shares and tokenized positions. 

The conversions are currently available on Ethereum and BNB Chain. Access is restricted to institutional clients approved by Alpaca, and participants need active accounts with both Alpaca and Ondo.

Ondo has grown into one of the largest tokenization platforms by onchain value. RWA.xyz data shows about $3.63 billion in distributed assets across 441 products, ranking it second behind Securitize.