Alpaca Custodies 94% of Tokenized Stock Market as DTCC Prepares to Enter
Alpaca says it custodies over $1.5 billion in shares backing tokenized equities, representing the vast majority of the market despite crypto's stated goal to remove intermediaries. The dominance underscores centralization risks as the DTCC readies its own tokenization service and the SEC flags custody and ownership hazards.
Key Takeaways
- 1## Alpaca's Outsized Role in Tokenized Equities Alpaca custodies more than $1.
- 25 billion in shares underlying tokenized equity tokens, according to the company.
- 3Public market trackers suggest this figure represents approximately 94% of the total tokenized stock market by volume, making Alpaca the effective gatekeeper of the sector despite the sector's founding narrative around eliminating traditional intermediaries.
- 4The concentration emerged as tokenized stocks gained traction among retail traders seeking fractional exposure to equities via blockchain.
- 5Tokens tracking Apple, Tesla, Google, and other major companies now trade on decentralized exchanges and specialized platforms, but settlement and custody still route through Alpaca's infrastructure.
Alpaca's Outsized Role in Tokenized Equities
Alpaca custodies more than $1.5 billion in shares underlying tokenized equity tokens, according to the company. Public market trackers suggest this figure represents approximately 94% of the total tokenized stock market by volume, making Alpaca the effective gatekeeper of the sector despite the sector's founding narrative around eliminating traditional intermediaries.
The concentration emerged as tokenized stocks gained traction among retail traders seeking fractional exposure to equities via blockchain. Tokens tracking Apple, Tesla, Google, and other major companies now trade on decentralized exchanges and specialized platforms, but settlement and custody still route through Alpaca's infrastructure.
Regulatory Warnings and Structural Risk
The SEC has warned that third-party stock tokens introduce additional layers of ownership and counterparty risk that traditional brokerage does not. Investors holding tokenized stocks depend on both the token issuer and the custodian—in this case, Alpaca—to maintain accurate claim to underlying shares. A failure or operational error at either point can result in loss of ownership claims.
Alpaca's dominance also creates a single point of failure for a market that promised decentralization. Token holders have no recourse if Alpaca experiences a technical outage, regulatory action, or insolvency.
DTCC Entry and Potential Market Shift
The Depository Trust & Clearing Corporation, which settles nearly all U.S. equities trades, announced plans to launch its own tokenization service in October. The DTCC's infrastructure and regulatory standing may attract issuers and traders seeking an alternative to Alpaca, potentially fragmenting the market or raising custodial standards across the sector.
The entry of an established clearinghouse into tokenized equities also signals regulatory acceptance of the underlying model—though custody and disclosure requirements will likely tighten in the process.
Why It Matters
For Traders
A concentrated custody model and SEC warnings on intermediary risk add operational and counterparty risk to tokenized equity positions; DTCC entry could alter trading venues and liquidity.
For Investors
High concentration with a single custodian undermines decentralization claims and creates structural fragility; DTCC's arrival may offer safer settlement but at the cost of centralization.
For Builders
Tokenized equity platforms now face competition from an established clearinghouse and must clarify custody, insurance, and regulatory frameworks to remain viable alternatives.
