Ondo Financial enables institutions to convert stocks into tokenized shares

Ondo Financial announced on Tuesday that it will let approved institutional investors convert stocks and exchange‑traded funds directly into tokenized shares, using the underlying securities instead of cash. The new “in‑kind” conversion system goes live on its blockchain platform, allowing institutions to mint and redeem digital tokens that represent real‑world equities in a single transaction.

The move comes as the crypto‑finance sector pushes for more efficient ways to bring traditional assets onto public blockchains. Tokenized stocks have been hampered by slow settlement times and the need to liquidate assets before minting tokens. By using the actual shares as collateral, Ondo aims to cut costs and reduce settlement risk. Regulators have been watching the space closely, and recent guidance from the U.S. Securities and Exchange Commission has clarified that tokenized securities can be compliant if they are fully backed by the underlying assets.

Ondo says the system will initially support a curated list of blue‑chip stocks and popular ETFs. Institutions that meet the platform’s compliance checks can submit the physical or electronic certificates of ownership, and receive an equivalent number of blockchain tokens in return. The tokens can be traded on secondary markets or held as a digital ledger entry. Early adopters, including a European asset manager and a U.S. hedge fund, praised the speed and transparency of the process. Analysts note that the in‑kind model could attract more institutional capital to decentralized finance, narrowing the gap between traditional markets and crypto.

The company plans to expand the offering to include mid‑cap equities and fixed‑income products later this year. It will also work with custodians to streamline the custody of the underlying securities. If the system scales, it could set a new standard for how large investors move between conventional and tokenized assets, potentially reshaping liquidity flows across both markets.