Tokenization

Tokenization is the act of creating a token on a blockchain to represent an asset or a right to it. The asset can be financial - a bond, a fund, a loan - or physical, like a building or gold. The token becomes the transferable record of ownership or economic rights in that asset.

Tokenization does three practical things. It enables fractional ownership, so a $2m building can be split into thousands of affordable shares. It makes transfers settle in minutes on a public ledger instead of days through intermediaries. And it puts the ownership record somewhere anyone can audit, rather than inside a single registrar's private database.

The process is less about the code and more about the legal structure. A typical deal places the underlying asset in a dedicated company, then issues tokens representing shares of that company. The smart contract enforces who may hold the token - usually only wallets that have passed KYC - while the off-chain agreement defines what the token actually entitles you to.

When the thing tokenized is an investment that pays a return, the token is a security token and the issuance must follow securities law. Getting the wrapper right - the holding entity, the disclosures, the transfer rules - is where most of the real work and most of the risk sits. The contract is the easy part.

Tokenization is not the same as listing an asset on an exchange, and it does not by itself create a buyer. A tokenized asset with no market is still illiquid.

Source: rwa.xyz, as of 2026.