Ondo has activated in-kind minting for its tokenized US equities product, letting approved institutions swap existing share inventory for Ondo Stocks through broker Alpaca and bypass the separate cash-leg funding step that the platform's prior issuance flow required.

The change, disclosed in a project announcement, targets the cash-funded creation step that previously sat between an institution and its tokenized exposure. Under the prior flow, counterparties wanting Ondo Stocks deposited cash, Ondo deployed that cash into the underlying shares, and tokens were then minted against them. The in-kind path lets a holder of eligible US equities pledge those shares at Alpaca and receive the tokenized wrapper on a like-for-like basis, with no cash interchange required at mint.

What the new mechanism changes

In-kind creation compresses the issuance workflow from three steps to one and frees up the working capital that the cash leg would otherwise have tied up. For the issuer, the marginal cost of each new mint — spanning rebalancing, dividend distribution and corporate-action handling — falls in line with how often the new path is used.

Alpaca, an API-first US equities broker, handles the brokerage and custody layer. The firm's existing infrastructure for routing equities orders feeds into Ondo's tokenization layer, and the in-kind flow extends that link so that share positions at the broker can be pledged as collateral at mint.

The announcement did not specify whether the minted tokens settle on a public chain, a permissioned chain, or a hybrid setup, nor whether the mint carries a transaction fee, an authorized-participant agreement, or both. Ondo did not address those points in the materials reviewed.

Who can access the in-kind flow?

Only approved institutions can use the new mechanism. The announcement did not name authorized participants, publish minimum ticket sizes, or specify which jurisdictions the flow will be available in on launch.

The product itself — tokenized US equities carrying dividend and corporate-action handling that mirror the underlying shares — had previously been reachable only through the cash-funded issuance flow. What changes with in-kind minting is the issuance layer rather than the underlying rights of the token.

Why does removing the cash leg matter?

Market makers and authorized participants have, since the first wave of tokenized stock products, pointed to cash-funded creation as the main operational drag on the asset class. Each new mint requires a desk to park capital at the issuer while the underlying share is acquired, compressing return on capital and discouraging frequent rebalancing.

In-kind creation removes that drag directly. Where adoption follows, secondary-market spreads on the tokenized leg should tighten and creation volumes should rise, particularly during high-volatility windows when institutional flow spikes.

Which details are still missing?

• Which institutions have cleared onboarding as authorized participants
• Which underlying tickers and ETFs are eligible for in-kind minting
• The settlement window at mint and at redemption, and whether it aligns to the standard T+1 US equities cycle
• Whether retail users will gain indirect access through institutional intermediaries
• Fee terms and capital requirements for authorized participants

Ondo did not address those questions in the materials reviewed. Alpaca did not publish a separate statement on the new flow.

What will the first quarterly disclosure show?

The next on-chain and operational data from Ondo — covering authorized-participant identities, eligible ticker list, and creation volumes after the in-kind path goes live — will determine whether the change materially expands tokenized equity float or simply re-routes flow that was already on the platform. If creation volumes rise by more than the marginal cost reduction alone would predict, the implication is that the cash leg — not investor appetite — was the binding constraint holding the asset class back.