What is tokenization of real-world assets, and does it change what you own?
Tokenization puts a claim on a bond, fund or other asset onto a blockchain. It can change how the asset is recorded and traded. It does not change what the asset is, or the law that applies to it.
Education only, not investment, tax or legal advice. Crypto-assets are high-risk — risk disclosure.
The short answer
Tokenization means recording ownership of a real or financial asset, such as a bond or fund share, as a token on a programmable ledger like a blockchain. The token is a new wrapper for a claim on the asset; the rights it gives depend on who issues it and how.
Key takeaways
- Tokenization uses technology such as distributed ledgers to issue or represent assets as digital tokens.
- Adoption is still small: the FSB said in 2024 that tokenization did not pose a material risk to financial stability, mainly because of its small scale.
- Early examples are mostly government bonds and money market fund products rather than houses or art.
- SEC staff say the format does not change the law: a tokenized security is still a security.
- A token issued by a third party can expose you to that third party's failure, on top of the risks of the asset itself.
What does it mean to tokenize a real-world asset?
Every financial asset lives in a record somewhere. A government bond sits in a central securities depository, a fund share in a transfer agent's register, a stock in a broker's books. Tokenization moves that record, or a copy of it, onto a programmable digital ledger. The Financial Stability Board (FSB) describes it as using new technologies such as distributed ledger technology (DLT) to issue or represent assets in digital form as tokens2.
The Bank for International Settlements (BIS) puts it slightly differently: tokenization is recording claims on real or financial assets that exist on a traditional ledger onto a programmable platform1. "Real-world assets" is the crypto industry's label for anything that exists off the blockchain, from Treasury bills to property. The token is only as good as the legal claim behind it.
The same bond, two ways of keeping the record
| Feature | Traditional record | Tokenized record |
|---|---|---|
| Where ownership is kept | Depository or registrar database | Token on a distributed ledger |
| How it moves | Through brokers and custodians | Transferred between digital wallets |
| What it is legally | A security | Still a security3 |
How does tokenization work, step by step?
Details vary, but most projects follow the same broad path. The crucial choice is who creates the token. US securities regulators distinguish tokens issued by the asset's own issuer from tokens created by an unrelated third party3.
Figure · From asset to token
- 01Real assetbond, fund share
- 02Legal linkissuer or custodian
- 03Token issuedon a ledger
- 04Investor walletholds and transfers
The main steps
- 1
Choose the asset and structure
Decide what the token represents and who stands behind it: the issuer itself, or a custodian holding the asset for token holders3.
- 2
Record ownership on a ledger
In an issuer-sponsored model, the issuer builds the ledger into its official records, so a token transfer is a transfer on the master register3.
- 3
Connect off-chain data
Prices, interest payments and other facts about the real asset have to be fed onto the ledger, often by services called oracles, which the FSB warns can be hacked or manipulated2.
- 4
Transfer and settle
Tokens move between wallets. Who guarantees that a transfer is final depends on the type of ledger used2.
What has actually been tokenized so far?
Less than the headlines suggest. The FSB found in 2024 that adoption was very low but growing, and that tokenization did not currently pose a material risk to financial stability, mostly because of its small scale2. The documented examples are mainly government debt and money market products2.
Documented examples from official reports
| Asset type | What the reports found |
|---|---|
| Money market fund products | Value of tokenised money market products roughly doubled from May 2023 to May 2024, to more than US$1 billion on permissionless blockchains2 |
| SSA bonds (sovereign, supranational, agency) | More than 20 tokenised issues, over $4 billion across nine currencies1 |
| Government bonds overall | Nearly $80 trillion outstanding worldwide1, compared with about $4 billion of tokenised SSA issues |
Why are banks and central banks interested?
The BIS calls tokenization the next logical step in the evolution of the monetary and financial system1. Its proposal is a unified ledger: one programmable platform, which may or may not use DLT, where tokenised central bank money, tokenised bank deposits and tokenised assets sit side by side1.
The size of the prize is what draws attention. With nearly $80 trillion of government bonds outstanding, the BIS argues, even modest efficiency gains could bring significant benefits1. Settlement speed is part of that story: the BIS notes that US securities settled in one day until the 1920s, and that settlement in US equity markets was lengthened to up to five days in the late 1960s1. Our explainer on CBDCs covers the wholesale central bank money that would sit on such a ledger.
Is a tokenized stock or bond still a security?
In the US, yes. In January 2026, staff of three SEC divisions stated that the format in which a security is issued, or the way holders are recorded, does not affect how federal securities laws apply3. Commissioner Hester Peirce made the same point in July 2025: tokenized securities are still securities4.
Figure · Who created the token matters
Issuer-sponsored
- Issued by the asset's issuer
- Token is in the official register
- Recorded on the master register
Third-party
- Created by an unrelated firm
- Custody receipt or synthetic
- Adds that firm's risk
The SEC staff statement describes two third-party models. In a custodial model, a firm holds the security and issues tokens that represent holders' entitlements to it. In a synthetic model, the firm issues its own instrument, such as a linked security or a security-based swap, that tracks the asset's value without conveying ownership3. Peirce warned that buyers of third-party tokens may face counterparty risk, and that a token that does not give legal and beneficial ownership of the underlying security may be a security-based swap4.
What are the risks of tokenized assets?
The FSB lists the financial vulnerabilities as liquidity and maturity mismatch, leverage, asset price and quality, interconnectedness, and operational fragilities2. Several risks are specific to the token wrapper:
- Legal uncertainty. Token holders' claims on issuers or underlying assets may lack legal clarity and may not be enforceable in some jurisdictions2.
- Bad data. Oracles that feed real-world information onto the ledger may be hacked or manipulated2.
- Settlement finality. On permissionless blockchains, finality depends on consensus, with no single party accountable for it2.
- Middleman failure. Holders of third-party tokens may be exposed to that firm's bankruptcy, a risk holders of the underlying security would not necessarily face3.
Risk warning
A token is only as good as the claim behind it
Before buying any tokenized asset, find out who issued the token, whether you own the asset or only a claim on a middleman, and what happens if that middleman fails. Tokenized products can lose value like any investment. Read our risk disclosure.
What do beginners get wrong about tokenization?
Common beginner mistakes
Thinking the token is the asset
The token records a claim. If the legal link to the asset is weak, the token can be worth less than the asset it points to2.
Assuming tokenized means unregulated
In the US, tokenized securities remain subject to federal securities laws3.
Ignoring who issued the token
An issuer-sponsored token and a third-party token on the same stock can carry very different rights and risks3.
Confusing tokenized assets with crypto coins
A tokenized Treasury bill represents government debt. Its value is meant to follow that debt, not the price of the blockchain's own coin.
Frequently asked questions
Can I tokenize my house?
Technology can create a token that points to a property, but the token is only useful if property law in your country recognises it as proof of ownership. The FSB warns that legal recognition of tokens for off-chain purposes may be lacking2.
Are tokenized assets traded 24/7?
The token may be transferable whenever the ledger runs, but issuing, redeeming and valuing it still depend on the issuer, custodian and markets behind it, which may keep normal business hours.
What blockchain do tokenized assets use?
Both public, permissionless blockchains and private, permissioned ledgers are used. The FSB's figure for tokenised money market products counts holdings on permissionless blockchains2.
How are stablecoins related to tokenization?
A stablecoin is itself a token that represents a claim on dollars, so it can serve as the payment side of a trade in tokenized assets on the same ledger.
Do I need a crypto wallet to hold tokenized assets?
Usually some kind of digital wallet is needed, which brings the key-management risks covered in our guide to crypto wallets and keys.
The bottom line
Tokenization changes the plumbing, not the asset. A tokenized bond is still a bond and, in the US, still a security. The real questions are who issued the token, what legal claim it gives you and what happens if a middleman fails. Activity is real but still small, concentrated in government bonds and money market products.
Sources
- Annual Economic Report 2025, Chapter III: The next-generation monetary and financial system — Bank for International Settlements, 2025 Primary source
- The Financial Stability Implications of Tokenisation — Financial Stability Board, 2024 Primary source
- Statement on Tokenized Securities — U.S. Securities and Exchange Commission (Divisions of Corporation Finance, Investment Management, and Trading and Markets), 2026 Primary source
- Enchanting, but Not Magical: A Statement on the Tokenization of Securities — U.S. Securities and Exchange Commission (Commissioner Hester M. Peirce), 2025 Primary source
How we checked this page: every figure above links to the numbered source it came from. Spotted an error? Tell the desk — see our editorial policy.
Read next
Finance · ExplainerWhat is a stablecoin, and how does it stay at one dollar?Stablecoins are crypto tokens built to stay boring: one token, one dollar. Whether they manage it depends on what backs them, who can redeem them and what the law requires.
Finance · ExplainerWhat is a central bank digital currency (CBDC)?A CBDC would put central bank money, today available to the public only as notes and coins, into a digital wallet. Most central banks are studying the idea; very few have gone live.
Finance · ExplainerWhat is a money market fund, and is it as safe as a bank account?Money market funds are where many people and companies park cash they may need soon. They are built to be steady, but they are investments, not bank deposits, and that difference matters most in a crisis.
Tech · ExplainerWhat is a smart contract, and what can go wrong with one?A smart contract is a program that lives on a blockchain and runs exactly as written. That makes it powerful, and it is also why a single bug can be so costly.
Tech · ExplainerWhat is a blockchain oracle, and why do smart contracts need one?A smart contract can only see what is already on its blockchain. Oracles are the bridge to everything else, and they are often the weakest link in the chain.
Policy · ExplainerWhat is the Howey test, and how does it decide if a crypto token is a security?A 1946 Supreme Court case about land and service contracts still decides whether many crypto tokens are securities in the United States. Here is how the test works and how the SEC used it in its 2026 crypto interpretation.