Ondo Launches In-Kind Conversion for Tokenized Stocks and ETFs

Ondo has introduced an in-kind conversion system that enables approved institutions to mint and redeem tokenized stocks and ETFs using the underlying securities instead of cash. This new process allows institutions to convert traditional stocks directly into tokenized shares, streamlining the tokenization process and potentially reducing costs and complexity.

## How the In-Kind Conversion Works Ondo's system eliminates the need for cash transactions during the tokenization process. Institutions can now convert their existing stocks into tokenized shares by depositing the underlying securities directly. This approach is expected to make the tokenization of traditional assets more efficient and cost-effective, as it bypasses the need for additional liquidity.

## Why This Matters for Institutions The in-kind conversion system could attract more institutions to the tokenized asset space by simplifying the process and reducing operational hurdles. By using the underlying securities, institutions can avoid the volatility and liquidity risks associated with cash transactions. This move aligns with Ondo's broader strategy to bridge traditional finance and blockchain technology, making tokenized assets more accessible to institutional investors.

## The Broader Context of Tokenized Stocks Despite the new SEC rules opening a path for trading tokenized stocks outside traditional markets, demand remains uncertain. According to a report by CoinDesk, TD Cowen expects limited demand for tokenized stocks. The investment bank cited a lack of institutional appetite for holding tokenized versions of assets that are already easily accessible in traditional markets, suggesting that even with regulatory clarity, adoption may be slow.

For those interested in the broader landscape of tokenized assets, you might want to explore how other platforms like Bybit and Kraken are also contributing to this evolving market.