Alpaca, a US brokerage technology startup, plans to launch an Alpaca prime brokerage business in the first quarter of 2027, aiming to finance trades for hedge funds and other large investment firms as crypto platforms push into stock trading. Chief executive Yoshi Yokokawa outlined the plan, which would take the California-based company into a Wall Street business long controlled by major banks, Bloomberg reported.
The move matters because prime brokers sit at the center of institutional trading, supplying financing, custody, securities lending and other services that let large investors run positions across markets without fully funding every trade on its own. Alpaca is seeking to capitalise on demand from investors trading across cryptocurrency platforms and conventional stock markets at the same time.
What Alpaca prime brokerage will offer
The planned business centers on adding financing, margin and securities lending to the infrastructure Alpaca already sells to financial institutions, with the services aimed at institutional clients, according to Crypto Briefing. Yokokawa told Bloomberg the expansion is intended to improve capital efficiency for institutions managing positions across digital asset platforms and conventional exchanges.
Such services could become more important as trading firms look to hedge tokenised equity positions against underlying shares or derivatives on different venues, for instance holding a tokenised stock on one platform while offsetting the exposure elsewhere. Hedge funds and proprietary trading firms already trade through Alpaca, which provides zero-commission algo trading, fast APIs, attractive margin pricing and securities that are readily available to borrow, Crypto Briefing reported.
Prime brokers can also help firms trading across crypto and traditional markets bridge a timing mismatch. Trades on crypto venues generally must be funded in advance, whereas US securities settle at a later date, and that gap in timing opens funding shortfalls that a financing provider can smooth over.
Tokenised stocks and the conversion hurdle
Alpaca enters the Alpaca prime brokerage market from a sizeable position in tokenised equities. More than US$3.5 billion in underlying US shares sits in its custody, backing tokenised products issued by upwards of 10 firms, among them Binance Holdings, Coinbase Global and Crypto.com, Yokokawa said, noting that these holdings are worth roughly eight times what they were twelve months ago.
Alpaca is developing technology to let tokenised stocks be swapped more readily for the actual shares behind them, Yokokawa said, describing this as a step that must come before leverage can be added. "If we are talking about digital assets and tokenised stocks, it's not really yet seamlessly getting converted into the underlying stocks," he said. Lacking that connection, traders can end up stuck in positions they cannot hedge or unwind fast, which leaves both them and their lenders carrying additional capital.
"Once conversion is reliable, balance sheet financing from prime brokers becomes more useful," he added. "We have to solve this interoperability first, in terms of redemption and minting, before we start adding more leverage into this transaction."
The company is also studying netting arrangements between trading counterparties, where mutual obligations would cancel each other out and cut the collateral required on any single trade, an approach that mirrors how clearinghouses operate in traditional markets.
Funding the balance sheet
The Alpaca prime brokerage push will require greater balance sheet capacity. The company raised US$135 million in equity and US$300 million in debt earlier this year. Crypto Briefing reported that the equity round closed in July 2026 as part of a larger US$435 million funding package earmarked for its API-first prime brokerage infrastructure.
Yokokawa said the firm will not set aside a fixed slice of equity capital for the new business. Rather, the financing would draw on a blend of its own balance sheet, borrowings and credit facilities, an approach similar to how established prime brokers fund themselves. "It may be coming from your balance sheet, it may be coming from debt, it may be coming from credit," he said.
The San Mateo-based company is a FINRA-regulated, self-clearing broker-dealer, meaning it clears its own trades rather than renting that function, according to Crypto Briefing. Its platform serves millions of brokerage accounts in over 40 countries, and the company has reported significant growth in revenue and trading volume, the outlet said.
A crowded field of crypto rivals
Other digital asset firms have spotted the same opening. Last week BitGo declared its ambition to make prime brokerage the core driver of its operations, and Coinbase, the biggest US crypto exchange, reported that its prime business is expanding quickly.
Alpaca is pitching itself on cheaper pricing, quicker trade execution and a design that puts APIs first to serve algorithmic strategies, Crypto Briefing reported. The company has partnered with Bybit to enable trading in US stocks and ETFs in a tie-up announced in October 2026, and it also works with Kraken as digital asset exchanges look to add equities to their offerings.
In Yokokawa's view, the larger prize lies in the steady merging of digital assets with conventional finance. "I think it's going to be both worlds colliding," he said. Whether Alpaca's funding is enough to compete at scale with institutions that have operated in this space for decades remains an open question, Crypto Briefing noted.
Conclusion
Alpaca plans to enter prime brokerage in the first quarter of 2027, bringing US$3.5 billion in custodied tokenised equity holdings, a self-clearing broker-dealer operation and a US$435 million funding package to a business long run by large banks. Before adding leverage, the company says it must first make tokenised stocks reliably convertible into their underlying shares and build out financing through a mix of balance sheet capital, debt and credit lines. It will compete against BitGo and Coinbase, both of which are expanding their own prime services.
Frequently Asked Questions
When will Alpaca launch its prime brokerage business?
Alpaca plans to launch its prime brokerage business in the first quarter of 2027, according to chief executive Yoshi Yokokawa. The business will offer financing, margin and securities lending to hedge funds and other institutional clients trading across crypto and traditional equity markets.
How much does Alpaca hold in tokenised US equities?
Yokokawa said Alpaca custodies upwards of US$3.5 billion in underlying US shares that back tokenised products from over 10 issuers, among them Binance Holdings, Coinbase Global and Crypto.com. He added that these holdings are now worth roughly eight times their level of a year ago.
How is Alpaca funding its prime brokerage expansion?
Alpaca raised US$135 million in equity and US$300 million in debt earlier this year, with Crypto Briefing reporting the equity round closed in July 2026 within a US$435 million package. Yokokawa said financing will come from a mix of balance sheet capital, debt and credit lines rather than a fixed equity allocation.
Why does Alpaca want to improve tokenised stock conversion?
Yokokawa said tokenised stocks are not yet seamlessly convertible into their underlying shares, which can prevent traders from hedging or exiting positions quickly and force them to hold more capital. He called solving this interoperability, in terms of redemption and minting, a prerequisite before adding leverage to such transactions.
Which crypto firms compete with Alpaca in prime brokerage?
BitGo recently declared it wants prime brokerage to serve as the core driver of its operations, while Coinbase, the biggest US crypto exchange, reported rapid expansion in its prime business. Both are building out institutional financing as digital assets and traditional securities markets become more closely integrated.
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