Tokenization converts ownership rights in an asset into a digital token that exists on a blockchain or distributed ledger. It can apply to a wide range of asset classes, including real estate, commodities, art, and traditional financial instruments such as shares or debt. By standardizing ownership as tokens, tokenization can enable fractional ownership, programmable features, and potentially easier transfer of ownership.
Tokenization sits within the broader move toward digital or tokenized markets. It raises questions about regulatory treatment (e.g., whether tokens are viewed as securities), custody and security of tokens, valuation, and the need for standards to ensure reliable ownership tracking and transfer.
In a commercial real estate project, the property is tokenized into 1,000 tokens representing fractional ownership, which can be exchanged on a compliant platform.
Digital asset · Security token · Fractional ownership · Smart contract · Blockchain · Asset-backed token