- Alpaca has introduced its Instant Tokenization Network (ITN), enabling institutions to directly mint and redeem tokenized U.S. stocks.
- The ITN allows immediate exchange of tokenized stocks for underlying shares, removing settlement delays and providing 24/7 access.
- The new system is available to U.S.-regulated financial institutions and operates beyond traditional market hours.
- The product supports SEC initiatives aiming to improve efficiency in the crypto exchange-traded product sector.
- The tokenized stock market is valued at over $700 million, and the broader tokenized asset market has surpassed $31 billion.
Alpaca, a U.S. broker-dealer, launched the Instant Tokenization Network (ITN), a platform permitting financial institutions to create and redeem tokenized versions of U.S. stocks directly. The launch was announced Wednesday and aims to increase onchain, or blockchain-based, liquidity in the tokenization market.
The ITN enables institutions to convert portfolios into tokenized assets with a single API call and allows these tokens to be exchanged directly for the underlying shares, bypassing settlement delays. According to Alpaca, the service functions around the clock, offering 24/7 market access.
By providing in-kind redemptions—meaning tokens can be swapped directly for the underlying assets instead of first converting to cash—the ITN seeks to make trading tokenized stocks more effective and accessible. “ITN’s process is best understood as a single API that enables two functions,” said Arush Sehgal, Alpaca’s head of crypto. “The first is the journaling of securities to and from brokerage accounts… The second is delivery of tokens by the issuer to their Authorized Participant, which is typically a non-U.S. entity affiliated with the U.S. institution that initiated the journaling of shares in step one.”
Alpaca supports recent tokenization efforts, including platforms by Ondo Finance and xStocks, providing the technical infrastructure. The ITN builds on recent guidance from the U.S. Securities and Exchange Commission (SEC), following the agency’s approval of in-kind creation and redemption for spot Bitcoin and Ether exchange-traded funds (ETFs).
The tokenized stock market now exceeds $700 million, based on figures from RWA.xyz. The wider tokenization market has reached more than $31 billion in assets, according to industry data. SEC Chair Paul Atkins called tokenization an “innovation” in July. After initial efforts with Treasury bonds and private credit, tokenized stocks are the next development.
Rob Hadick, general partner at Dragonfly, commented at TOKEN2049 that traditional finance institutions are drawn to features like 24/7 trading but remain cautious about sharing blockchain infrastructure with retail-focused projects. The SEC is reportedly evaluating whether traditional equities could trade on blockchain networks similarly to cryptocurrencies.
For more on tokenized stocks, see the Cointelegraph article here.
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