Alpaca Controls 94% of Tokenized Equities Before DTCC Launch

Woofun AI reports that the tokenized equity market, despite its decentralized branding, is structurally anchored by a single brokerage firm, Alpaca, which controls 94% of the sector. This extreme concentration stands in stark contrast to the industry’s foundational promise of disintermediation, revealing a hidden layer of traditional financial infrastructure beneath the blockchain veneer. The core paradox lies in the fact that while investors trade digital tokens on crypto exchanges, the underlying assets are warehoused and managed by a centralized California-based entity, creating a fragile dependency that challenges the narrative of financial liberation.

The concept of tokenization involves representing real-world assets as digital tokens on a blockchain, allowing ownership or tracking of the asset through the token itself. In the context of equities, this means that shares of major companies like Apple or Nvidia exist as digital entries in a crypto wallet, enabling 24/7 trading on crypto exchanges and near-instantaneous transfers between buyers without engaging a traditional brokerage account. The theoretical appeal of this model is disintermediation, the removal of all intermediaries between the investor and the asset.

However, tracing these tokens back to their source reveals that the trail does not lead to a decentralized network but converges on a single, relatively unknown California brokerage. This structural reality undermines the promise of a broker-less future, as the blockchain layer merely sits atop a traditional custody and clearing framework.

Alpaca’s role extends far beyond simple share custody, encompassing a comprehensive suite of financial services that integrate traditional market mechanics with blockchain technology. As a California brokerage, Alpaca holds the underlying stocks one-to-one, executes and clears trades, and operates the Instant Tokenization Network, which facilitates real-time minting and redemption of tokens from brokerage positions. The firm processes corporate actions for all partners, including dividends, splits, and other events, ensuring that the economic benefits of ownership are distributed correctly.

Additionally, Alpaca provides stock lending, short locates, and insured cash sweeps to issuers and their market makers, who are the trading firms responsible for keeping token prices aligned with the actual stock market. To address governance issues, Alpaca has partnered with Broadridge to bring proxy voting and shareholder governance capabilities to tokenized equities, attempting to bridge the gap between digital tokens and traditional shareholder rights.

The client base of Alpaca includes major industry players such as Binance, Kraken, Ondo, and Dinari, covering most of the product families that retail buyers encounter. Alpaca claims to custody more than $1.5 billion of shares backing tokenized equities, a figure measured as of July 2026.

However, this number is complex; it counts only the stocks backing tokens that are live and in circulation, excluding equities held for ordinary brokerage clients. This definition creates a narrow view of the market, inviting comparison with public data that often yields different results. The $1.5 billion figure represents a significant portion of the market, but its exclusivity makes direct comparisons with broader market metrics difficult, as it does not account for the full scope of Alpaca’s custody operations or the total value of tokenized assets in existence.

Woofun AI data shows, Data discrepancies further complicate the understanding of Alpaca’s market dominance. When Alpaca’s $1.5 billion figure is compared against larger public tracker numbers, the company appears to back around four-fifths of the measured market.

However, this calculation is blurred by several factors, including tokens classified elsewhere, institutionally held products that are invisible to public trackers, and timing gaps between minting events and dashboard updates. These variables make the denominator of the market share calculation unstable, leading to a 94% share figure that rests entirely on Alpaca’s own measuring system. Neither Alpaca nor the public trackers have published a reconciliation that would allow an outsider to verify the math, leaving the precise market share open to interpretation. The lack of standardized metrics means that the 94% figure is more of an internal estimate than a universally accepted fact, highlighting the opacity of the current tokenized equity landscape.

Investors in most Alpaca-backed products face significant risks due to the lack of direct rights and entitlements. Holders currently receive no voting rights and no direct dividend entitlement; their claim runs to the token issuer under contract terms before it ever reaches the underlying share. The partnership with Broadridge for governance is a tacit acknowledgment that these protections do not yet travel with the token. In some cases, shares never arrived, campaigns were canceled on listing day, and every buyer was refunded.

This breakdown occurred at the allocation layer, where shares are sourced upstream of Alpaca’s custody desk, placing the fault with the issuer that took the orders. This incident demonstrated that a token is merely a promise about inventory, and that promise depends on a chain of intermediaries that the holder cannot see or control, exposing investors to counterparty risk that is often obscured by the technical complexity of the token structure.

Barriers to exit further entrench Alpaca’s dominance, as API integrations and liquidity provider gravity make migration difficult. While Alpaca claims that arrangements are not designed to lock anyone in, transferring underlying positions through the Depository Trust Company (DTC) takes days, and the real timeline is set by rebuilding API integrations and coordinating minting and redemption cutovers with market makers. Crucially, these market makers are also on Alpaca, meaning that an issuer contemplating a migration would be leaving the broker that serves its liquidity providers. This creates a gravitational pull that keeps the market consolidated, as the cost and complexity of moving away from Alpaca are high. The interdependence between the broker, the market makers, and the issuers creates a sticky ecosystem that resists fragmentation, even when formal exits are available.

The upcoming October launch of the Depository Trust and Clearing Corporation (DTCC) Tokenization Service represents a massive shift in the market landscape. The DTCC is the settlement backbone of the American stock market, standing behind almost every US share trade. Through its Depository Trust Company (DTC) subsidiary, it holds the actual securities in custody, more than $114 trillion of them, with its subsidiaries settling $4.7 quadrillion in transactions during 2025. Owning a US stock, at the deepest level, means DTC has the share recorded on its books. In October, the DTCC will launch its Tokenization Service, allowing DTC-held securities to be issued directly as tokens and converted back and forth between traditional and tokenized forms, delivered to a participant’s chosen wallet. This launch will effectively reorder the market by introducing an official, institutionally backed alternative to the current third-party token models.

The competitive threat posed by DTCC’s official tokens is significant, as they offer voting rights, dividends, and legal ownership, unlike third-party contracts that provide only economic exposure. Tokens issued through DTC originate inside the system that records ownership, landing first on large-cap names like Apple and Nvidia that drive most tokenized-stock demand. Tokenized Apple or Nvidia, issued by the depository itself with full shareholder protections attached, will become available to institutions that have previously kept their distance from third-party products. This creates a direct competitor to the current version of tokenization, which is built outside the DTC system and offers a contractual claim short of ownership. The availability of official tokens for the most sought-after stocks could draw institutional capital away from third-party products, challenging Alpaca’s dominance.

Alpaca’s strategic positioning within the DTCC ecosystem may mitigate some of these risks, but the future remains uncertain. Alpaca has been self-clearing at DTCC since 2024 and sits among the 50-plus firms on the industry working group that designed the tokenization service. It was also among the July 15 participants converting a traditional equity entitlement into a DTCC token.

However, this framing will be tested in October, as every DTC participant will gain access to the service, and the working-group seat that helped Alpaca shape the service also shows competitors exactly what to build. Three outcomes are possible: DTCC entrenches Alpaca as the gateway issuers use to reach it, competitors match that connectivity and erode the early lead, or two markets settle in parallel, with official rights-carrying tokens serving regulated institutions and third-party tokens serving everyone offshore.

The strongest claim supported by evidence is that tokenized stocks are decentralized at the investor layer but highly concentrated at the layer reconnecting to the American market. One company set the terms of its own dominance, helped write the rules of the settlement system meant to challenge it, and holds the shares whichever way October breaks. The blockchain changed how a stock reaches a buyer, but it left the broker underneath it larger than before.