Understanding Alpaca, the infrastructure behind tokenized stocks: Why do platforms like Binance rely on it?

Author | Wu Talk Blockchain

TL;DR:

Binance's on-chain securities product, bStocks. In this system, Alpaca handles core securities infrastructure functions—including execution, clearing, and custody—playing a critical role in bridging the crypto market with the U.S. securities market.

From API Brokerage to RWA Infrastructure:Alpaca evolved from an algorithmic trading software company into a self-clearing broker-dealer in the United States, standardizing and modularizing its securities trading capabilities through its Brokerage API. It is often dubbed the 'Stripe of securities trading.' Its services now reach hundreds of partners globally and millions of end-user accounts.

Self-clearing capability forms a core competitive moat:Unlike most brokers that rely on third-party clearing agencies, Alpaca possesses integrated capabilities for trade execution, clearing, and custody. In the domains of tokenized securities and real-world assets (RWA), this combination of regulatory compliance and infrastructure capacity is highly scarce.

ITN network and ecosystem partnerships reinforce its leadership position:Alpaca’s Instant Tokenization Network (ITN) aims to bridge traditional securities inventory with on-chain issuance workflows, while forging partnerships with RWA projects such as Ondo, Backed, and Dinari. According to company disclosures, Alpaca holds approximately 94% market share in custodied assets related to tokenized U.S. stocks and ETFs.

Regulatory and centralization risks persist amid RWA growth:The tokenized equities market remains in its early stages, with most offerings providing economic rights to securities rather than direct equity ownership. As the industry scales, evolving regulations, liquidity constraints, and excessive centralization of infrastructure pose significant challenges to future development.

Alpaca: The key infrastructure provider behind Binance bStocks

Binance recently launched a related product that routes orders through Nest Trading Limited—a licensed ADGM brokerage entity involved in Binance’s U.S. equities business structure—with Alpaca Securities LLC handling order execution, clearing, custody, dividend disbursement, and corporate actions processing.

It should be noted that Binance currently offers traditional U.S. equity trading services through licensed brokerage channels, whereas the upcoming bStocks will be on-chain securities products built on the BNB Chain—clearly differing in both legal structure and technical implementation.

bStocks will be issued by BTECH Holdings Ltd, a special-purpose entity registered with the Abu Dhabi Global Market (ADGM), representing equities on-chain via the BNB Chain. Their economic value will mirror that of the underlying stocks and will be backed by a licensed framework. This move marks Binance’s strategic evolution from a pure crypto-asset platform toward a multi-asset and real-world assets (RWA) direction, offering crypto-native users additional pathways to integrate with traditional finance.

Alpaca’s Background and Development Path

Alpaca’s story began in 2015, co-founded by Japanese entrepreneurs Yoshi Yokokawa (current CEO) and Hitoshi Harada (CPO/CTO). Initially named AlpacaDB, the company focused on algorithmic trading infrastructure and database tools. Around 2017, it pivoted toward brokerage infrastructure and, over the following years, gradually built self-clearing broker-dealer capabilities. Headquartered in San Mateo, California, Alpaca is now a FINRA-registered and SIPC-member firm.

The self-clearing model means Alpaca does not rely on other brokers for clearing services but instead independently handles core functions such as client bookkeeping, clearing, and custody—a relatively rare capability in the industry and a key foundation for establishing trust in the RWA space. Its flagship Brokerage API encapsulates complex compliance, risk management, and settlement logic from traditional securities trading into streamlined REST and WebSocket interfaces, earning it the nickname 'the Stripe of securities trading' within the industry. This developer-first approach has significantly lowered the technical barrier for fintech startups, crypto platforms, and institutional investors seeking access to U.S. equity markets.

According to company disclosures, its infrastructure already serves hundreds of global partners and supports trading activity for millions of end-user brokerage accounts.

On January 14, 2026, Alpaca closed a $150 million Series D funding round led by Drive Capital, along with an additional $40 million credit facility, valuing the company at $1.15 billion. Investors include major players from both traditional finance and crypto sectors, such as Citadel Securities, Kraken, BNP Paribas’ venture arm (Opera Tech Ventures), MUFG, and DRW. This round not only provides substantial capital support but also reflects strong market confidence in Alpaca’s role as foundational infrastructure bridging traditional finance (TradFi) and crypto finance (Crypto).

Why Does Alpaca Lead in Tokenized U.S. Stocks & ETFs?

As of December 2025, according to Alpaca’s own disclosures, it holds approximately 94% market share in tokenized U.S. stocks and ETFs by assets under custody (reaching 97% for large-cap and mega-cap equities), with over $480 million in tokenized assets under custody. Given the absence of standardized reporting in the tokenized equities market, figures may vary across institutions due to differing measurement methodologies.

This leadership position stems from competitive advantages Alpaca has built across multiple dimensions.

1. Self-clearing capability + scarcity of regulatory compliance

Tokenized assets involve multiple regulatory requirements from the SEC, including custody security, anti-money laundering (AML), and investor protection. Under the current regulatory environment, many traditional brokers opt to wait or avoid collaboration with real-world asset (RWA) projects altogether due to high compliance costs and significant risk exposure. Alpaca, leveraging its self-clearing broker-dealer license, can independently handle core functions such as trade execution, clearing, and custody, providing RWA projects with regulated securities custody and clearing capabilities and delivering comprehensive back-end infrastructure support for their asset tokenization mechanisms.

This end-to-end self-clearing capability significantly lowers operational barriers and potential compliance risks for token issuers, enabling them to focus more on product design and market promotion without needing to build or integrate complex TradFi back-end systems themselves. Against the backdrop of an evolving regulatory framework for tokenized securities and immature industry practices, this scarce capability forms a critical foundation for Alpaca to establish trust barriers and attract mainstream RWA issuers.

2. Instant Tokenization Network (ITN) — Key technological infrastructure

On October 2, 2025, Alpaca launched the Instant Tokenization Network (ITN)at the TOKEN2049 Singapore conference. This network enables authorized participants to perform 24/7 in-kind minting and redemption through a single API, achieving near real-time processing of token issuance and redemption from a user experience perspective. This significantly enhances transaction efficiency and mitigates liquidity fragmentation. For issuers, the ITN’s value lies not only in improving minting/redemption efficiency but also in connecting compliant securities inventory with on-chain issuance workflows via a unified interface, thereby reducing operational complexity for tokenized securities.

This design effectively bridges traditional finance’s compliance requirements with blockchain’s programmability, offering institutions more flexible inventory management and rebalancing tools. However, it is important to note that settlement of the underlying equities must still adhere to the rules and timing requirements of traditional securities systems (e.g., DTCC). The ITN primarily achieves a leap in efficiency at the token layer.

3. Partner network and first-mover advantage

Through early strategic positioning, Alpaca has built an extensive partner network that includes major RWA issuers such as Ondo Finance, Backed Finance (Kraken xStocks), Dinari, and Anchored. Its custody services cover highly liquid tokenized assets including TSLA, SPY, QQQ, NVDA, and IVV, establishing a strong competitive edge in both asset coverage and liquidity aggregation.

This network effect creates a virtuous cycle: more high-quality projects choose Alpaca → liquidity and available assets further expand → attracting more issuers and institutions to participate. As the RWA ecosystem grows, Alpaca’s first-mover advantage is reflected not only in the number of partnerships but also in its gradually established ecosystem network and industry influence, further reinforcing its position within the tokenized equities infrastructure ecosystem.

4. Developer-Friendliness and Infrastructure Reliability

Alpaca has disclosed that its system achieves 99.99% availability. Its Brokerage API supports global multi-asset and multi-market access and is regarded by many fintech companies and crypto platforms as one of the more streamlined solutions for accessing the U.S. securities market. Binance’s current U.S. stock trading service relies on Alpaca for backend securities infrastructure, including execution, clearing, and custody. As for whether and to what extent Binance’s future bStocks product will leverage Alpaca’s capabilities, publicly available information remains limited at this time.

This highly available infrastructure and developer-friendly design significantly shorten integration cycles for crypto platforms and fintech companies, lowering technical barriers and maintenance costs. In the fast-iterating crypto industry, Alpaca’s reliable infrastructure has become one of the key reasons large platforms are willing to engage in deep collaboration.

5. Market Timing

Alpaca’s first-mover advantage is particularly evident in its market timing. Before the emergence of the tokenized securities market, the company had already spent years building its self-clearing broker-dealer capabilities and continuously invested in infrastructure such as its Brokerage API. With the rapid growth of the RWA and tokenized equities markets in 2025, these capabilities—originally developed for traditional brokerage services—are now demonstrating broader applicability.

As more institutions and crypto platforms seek compliant infrastructure for securities custody, clearing, and issuance, Alpaca already possesses relatively mature technology and regulatory foundations, enabling it to quickly meet these demands and expand its partner network. Compared to later entrants, its long-term investments in licenses, technology, and ecosystem development have positioned it favorably during the early stages of industry growth.

Current Architecture and Future Outlook

Within Binance’s business workflow, after a user places an order, it is routed via Nest Trading to Alpaca Securities for backend processing—including execution, clearing, and custody—and ultimately connects to the U.S. securities clearing system (e.g., DTCC). ITN provides a higher-level API abstraction in scenarios requiring tokenization.

From an industry perspective, the tokenized equities market remains in its early stages and is still small compared to the traditional securities market. Most tokenized stock products offer only economic exposure to the underlying securities rather than direct equity ownership; voting rights, dividend entitlements, and full legal rights depend on the specific issuance structure. The sector also faces regulatory uncertainty, jurisdictional restrictions, liquidity challenges, and potential risks stemming from infrastructure concentration.

Despite the aforementioned limitations, Alpaca’s value as an infrastructure bridge between traditional finance (TradFi) and crypto finance is increasingly gaining market recognition. As more crypto platforms, real-world asset (RWA) projects, and fintech companies integrate Alpaca’s securities infrastructure services, its global ecosystem continues to expand. Whether Alpaca can maintain its current competitive edge in an increasingly crowded market will depend on its sustained investment in technological innovation, regulatory compliance, and ecosystem development. Meanwhile, the competitive landscape may continue to evolve as more traditional financial institutions, broker-dealers, and emerging RWA infrastructure providers enter the market.

Risk Warning:The tokenized securities, real-world assets (RWA), and digital asset products discussed in this article remain in a phase of rapid development, and regulatory requirements across different jurisdictions may change. Some of the market share and asset size data cited herein are derived from publicly disclosed company information, and discrepancies may arise due to differing methodologies of calculation.

33K Views