Alpaca custodies 94% of tokenized stock market, raising centralization fears

Alpaca Financial Group holds more than $1.5 billion in shares backing tokenized equities, representing about 94% of the entire market, the custodian said.

"Alpaca says it custodies more than $1.5 billion of shares backing tokenized equities, which, by public tracker measurements, would represent most of the market," the company said in a statement dated July 26.

The concentration reveals a paradox at the heart of the tokenization sector: a technology built on decentralized ledgers now depends on a single regulated broker-dealer to custody the underlying assets. Public tracker data shows that of the roughly $1.6 billion in tokenized equity products across platforms, Alpaca serves as the custodian for the vast majority.

The finding threatens to undermine one of crypto's core value propositions — the elimination of intermediaries. If a single custodian failure could freeze 94% of the tokenized equity market, institutional investors may reconsider the risk-reward calculus. Regulators in the US and Europe, already scrutinizing digital asset custody practices, are likely to take note of the concentration risk embedded in the tokenization pipeline.

This article is for informational purposes only and does not constitute investment advice.