Alpaca plans to launch a prime brokerage business in the first quarter of financial year 2027 as it expands into services connecting cryptocurrency and traditional financial markets, Bloomberg reported.

London’s trading industry is coming home!

The California-based company raised $150 million in an equity round in January, reaching a valuation of $1.15 billion. In August, Monetae launched 70 tokenised US stocks in El Salvador using Alpaca’s brokerage infrastructure, extending its role in the tokenised equity market.

Prime Brokers Address Funding Gaps Across Markets

Chief Executive Officer Yoshi Yokokawa said the company aims to meet demand for financing and other services that help large investors manage positions across markets.

Speaking on the sidelines of the Token2049 conference in Singapore, he cited capital efficiency as a key reason for using prime brokers.

Prime brokers provide financing, custody and securities lending to hedge funds and other institutional investors. These services can help firms manage funding gaps between cryptocurrency platforms, which often require trades to be pre-funded, and traditional securities markets, where settlement takes longer.

Alpaca Holds $3.5 Billion in Tokenised Shares

Alpaca also provides custody for tokenised equities. Yokokawa said it holds more than $3.5 billion in underlying US shares backing tokenised products from more than 10 issuers, including Binance, Coinbase and Crypto.com. The value of these holdings has increased about eightfold over the past year.

The company is working to make tokenised stocks easier to convert into the underlying shares. Yokokawa said reliable conversion and redemption processes were needed before leverage could be expanded in these transactions.

“We have to solve this interoperability first, in terms of redemption and minting,” he said.

Alpaca is also exploring ways to offset obligations between trading firms, which could reduce the collateral required for individual transactions.

The prime brokerage launch will require additional financing capacity. Alpaca raised $135 million in equity and $300 million in debt earlier this year. Yokokawa said the company expects to fund the business through a combination of its balance sheet, debt and credit lines.

Other cryptocurrency firms are also expanding into prime brokerage. BitGo recently said it wanted the business to become its main revenue driver, while Coinbase has reported growth in its prime brokerage operations.

This article was written by Tareq Sikder at www.financemagnates.com.Institutional FXRead More

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