Key Takeaways
- • Alpaca, a California-headquartered brokerage technology startup, plans to launch a prime brokerage business in the first quarter of fiscal year 2027, according to CEO Yoshi Yokokawa.
- • Alpaca custodies more than US$3.5 billion of underlying US shares backing tokenised products from more than 10 issuers, including Binance Holdings, Coinbase Global and Crypto.com; the value of those holdings has grown roughly eightfold year over year.
- • The company raised US$135 million in equity and US$300 million in debt earlier this year and will fund prime brokerage from a mix of its balance sheet, debt and credit lines rather than a fixed equity allocation.
- • Yokokawa said tokenised stocks are not yet reliably convertible into underlying shares, and Alpaca must solve redemption and minting interoperability before adding leverage.
- • Competitors BitGo and Coinbase are also pursuing prime brokerage growth as crypto venues push into traditional stock trading.
Summary
Alpaca, a brokerage technology startup that provides trading and custody infrastructure to financial institutions, is preparing to enter a segment of Wall Street long dominated by major banks: financing trades for hedge funds and other large investment firms. According to Bloomberg, chief executive Yoshi Yokokawa said the company plans to launch a prime brokerage business in the first quarter of fiscal year 2027. He made the remarks on the sidelines of the Token2049 conference in Singapore.
The move targets growing demand for services that let investors trade across cryptocurrency platforms and conventional stock markets. Prime brokers provide financing, custody, securities lending and other services that allow large investors to run positions across markets without fully funding each trade. That role is becoming more important as investors trade tokenised stocks or crypto derivatives on one venue while hedging exposure elsewhere. Crypto venues often require pre-funding, while US securities typically settle later, creating funding gaps that prime brokerage can bridge.
Alpaca already has a significant footprint in tokenised equities. Yokokawa said the company custodies more than US$3.5 billion of underlying US shares backing tokenised products from more than 10 issuers, including Binance Holdings, Coinbase Global and Crypto.com, and that the value of those holdings has grown about eightfold from a year earlier. He acknowledged that tokenised stocks are not yet seamlessly convertible into the underlying shares, a gap that could leave traders unable to hedge or exit positions quickly. "Once conversion is reliable, balance sheet financing from prime brokers becomes more useful," he said, adding that interoperability in redemption and minting must be solved before more leverage is introduced.
Funding the build-out will require greater balance sheet capacity. Alpaca raised US$135 million in equity and US$300 million in debt earlier this year. Yokokawa said the firm will not earmark a fixed portion of equity for prime brokerage, instead drawing on its own balance sheet, debt and credit lines, similar to established prime brokers. Alpaca is also exploring netting arrangements to offset what trading firms owe one another, reducing collateral required per trade in a manner similar to clearinghouses.
The company is not alone. Bloomberg reported that BitGo recently said prime brokerage would become the main engine of its business, and Coinbase said it is seeing rapid growth in its prime operations. Yokokawa framed the opportunity as a convergence of crypto and traditional finance: "It's going to be both worlds colliding."
The move targets growing demand for services that let investors trade across cryptocurrency platforms and conventional stock markets. Prime brokers provide financing, custody, securities lending and other services that allow large investors to run positions across markets without fully funding each trade. That role is becoming more important as investors trade tokenised stocks or crypto derivatives on one venue while hedging exposure elsewhere. Crypto venues often require pre-funding, while US securities typically settle later, creating funding gaps that prime brokerage can bridge.
Alpaca already has a significant footprint in tokenised equities. Yokokawa said the company custodies more than US$3.5 billion of underlying US shares backing tokenised products from more than 10 issuers, including Binance Holdings, Coinbase Global and Crypto.com, and that the value of those holdings has grown about eightfold from a year earlier. He acknowledged that tokenised stocks are not yet seamlessly convertible into the underlying shares, a gap that could leave traders unable to hedge or exit positions quickly. "Once conversion is reliable, balance sheet financing from prime brokers becomes more useful," he said, adding that interoperability in redemption and minting must be solved before more leverage is introduced.
Funding the build-out will require greater balance sheet capacity. Alpaca raised US$135 million in equity and US$300 million in debt earlier this year. Yokokawa said the firm will not earmark a fixed portion of equity for prime brokerage, instead drawing on its own balance sheet, debt and credit lines, similar to established prime brokers. Alpaca is also exploring netting arrangements to offset what trading firms owe one another, reducing collateral required per trade in a manner similar to clearinghouses.
The company is not alone. Bloomberg reported that BitGo recently said prime brokerage would become the main engine of its business, and Coinbase said it is seeing rapid growth in its prime operations. Yokokawa framed the opportunity as a convergence of crypto and traditional finance: "It's going to be both worlds colliding."
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