The Hidden Brokerage Controlling 94% of Tokenized Stocks

Crypto enthusiasts often praise tokenized stocks for promising a future without intermediaries. By placing real world assets on a blockchain, these tokens allow anyone to trade fractional pieces of companies like Apple or Nvidia around the clock. Yet, behind the scenes, the industry relies on a single entity for the vast majority of its operations. The California based brokerage Alpaca now custodies roughly 94% of tokenized US equities, holding over $1.5 billion in underlying shares.

Alpaca acts as the primary counterparty for major platforms including Kraken, Binance, and Ondo. The company handles the heavy lifting by purchasing the real shares, managing the minting process, and tracking corporate actions like dividends. Because established brokers were initially hesitant to enter the space, Alpaca became the go to partner for almost every issuer seeking to bridge traditional finance with crypto wallets.

This concentration of power raises questions about the true nature of decentralized finance. The SEC has previously warned that third party tokens may expose investors to extra risks if the intermediary fails. Most current token holders do not own the actual shares directly, meaning they lack direct voting rights or dividend claims. Instead, their ownership is tethered to the contract terms provided by the token issuer.

As the DTCC prepares to launch its own tokenization service this October, the market faces a reality check. Traders should watch how these new institutional services impact the dominance of current intermediaries. The reliance on a single brokerage serves as a reminder that even in a digital asset world, traditional financial plumbing still holds the cards.