US broker-dealer Alpaca has introduced an Instant Tokenization Network (ITN) enabling institutions to directly mint and redeem tokenized US stocks, a development that could enhance on-chain liquidity in a segment of the tokenization market still limited by structural constraints.
The ITN allows institutions to tokenize portfolios with a singular API call and redeem tokens in-kind for the underlying shares without experiencing settlement delays, as disclosed by Alpaca on Wednesday. The service extends beyond traditional market hours, offering round-the-clock access.
By facilitating in-kind redemptions — directly exchanging tokens for their underlying assets instead of settling in cash first — the network seeks to enhance the liquidity and efficiency of tokenized stocks.
Alpaca indicated that this feature is built upon the US Securities and Exchange Commission’s (SEC) recent initiatives to tackle similar inefficiencies in the crypto exchange-traded product (ETP) market, particularly with its approval of in-kind creation and redemption for spot Bitcoin (BTC) and Ether (ETH) ETFs.
The ITN is accessible to US-regulated financial institutions, Alpaca informed Cointelegraph.
“ITN’s operation is best understood as a single API that supports two functions,” Arush Sehgal, Alpaca’s head of crypto, told Cointelegraph.
“First is the journaling of securities to and from brokerage accounts, applicable to US-regulated financial institutions,” he explained. “The second function is the delivery of tokens by the issuer to their Authorized Participant, which is usually a non-US entity affiliated with the US institution that began the journaling of shares in the first step.”
Alpaca has been a key supporter of recent tokenization projects, including Ondo Finance’s platform for tokenizing stocks and ETFs as well as xStocks’ platform for tokenized equities.
Related: Solana Foundation, Bitget Wallet join Ondo Finance’s ‘market alliance’
Wall Street, SEC converge on tokenization
The tokenization of real-world assets has emerged as a leading blockchain investment trend of 2025, with over $31 billion in assets now represented on-chain, based on industry data.
In the United States, the movement is gaining momentum with regulatory support: SEC Chair Paul Atkins labeled tokenization as an “innovation” in comments made in July.
Following the initial wave of tokenization led by US Treasury bonds and private credit, tokenized stocks appear to be the next frontier.
“There’s no doubt it has a significant impact on TradFi,” said Rob Hadick, general partner at crypto venture capital firm Dragonfly, in a conversation with Cointelegraph during the TOKEN2049 conference in Singapore. He noted that traditional finance is increasingly attracted to features like 24/7 trading.
However, Hadick warned that institutional players remain cautious about sharing blockchain infrastructure with retail-focused projects.
“They prefer to control aspects such as privacy [and] the validator set, seeking control over what happens in their execution environment,” he remarked.
This shift coincides with reports that the SEC is contemplating a framework to allow traditional equities to trade on blockchain networks in a manner akin to cryptocurrencies.
Magazine: Robinhood’s tokenized stocks have stirred up a legal hornet’s nest
