Tokenization is moving from theory to real markets

Tokenization has mostly been discussed as a future concept. Stocks could in theory one day trade on blockchains. Bonds could in theory settle around the clock. Private-market assets could in theory become accessible to the general public and easy to transfer. Real-world assets could in theory interact with decentralized financial applications.

Tokenization is moving from theory to real markets.

But understanding the trend requires first answering a more basic question: what exactly can be and is being tokenized?

Tokenization means representing an asset, ownership interest or economic claim through a digital token recorded using distributed-ledger technology. The underlying asset does not necessarily change.

For example, a tokenized Treasury bill remains economically linked to government debt. A tokenized money-market fund remains a fund. A tokenized share may carry the same legal and economic rights as a conventional share, depending on the structure connecting the blockchain token to the security.

The U.S. Securities and Exchange Commission describes a tokenized security as a security that is represented as a crypto asset. The ownership records are maintained wholly or partly using crypto networks or distributed-ledger technology.

Essentially, tokenization refers to a new representation and transfer mechanism that can provide investors with exposure to an asset class. It is not a new asset class by itself.
 

The tokenization label becomes more complicated when third parties tokenize assets they did not issue. The SEC outlined several possible structures in a January 2026 statement. An issuer can directly incorporate blockchain-based records into its own securities system.

Alternatively, a third party can create a tokenized security entitlement backed by another security.

Another option consists of a third party issuing a separate linked instrument that merely provides synthetic exposure to the referenced security. In this case, holding the token does not necessarily make someone a shareholder in the underlying company.

The SEC specifically notes that a linked security can track the value of another security without conferring the voting, information or other rights associated with ownership of that underlying security.

That is why, for example, "tokenized Apple stock" can mean different things depending on the issuer. Investors should understand who issued the token, what backs it, whether it is redeemable, where the underlying share is held, and what legal rights the token holder actually receives.

CoinDesk Data reported that tokenized-equity trading volume rose 16.4% from August 2026 to a record high $15.6 billion in September. Robinhood accounted for $6.57 billion of the reported September total, followed by bStocks at $5.42 billion, xStocks at $2.11 billion, and Coinbase at $804 million.

It is important to note that the $15.6 billion figure does not mean investors held $15.6 billion worth of tokenized shares. CoinDesk Data placed the value of the tokenized stock and equity category at $4.87 billion during the same period.

This makes sense. One dollar worth of an asset can change hands many times, so trading volume substantially exceeds the amount outstanding.

Data providers also classify tokenized assets differently. RWA.xyz, for example, showed $3.42 billion in distributed value for tokenized stocks on October 20, alongside $10.28 billion in monthly transfer volume. Its dataset includes both tokenized public equities and synthetic representations.

One of the clearest tokenization use cases has been government debt and money-market funds. RWA.xyz tracked approximately $14.5 billion in distributed tokenized U.S. Treasury value on October 20, across 117 assets and more than 85,000 holders.

One factor that may help explain the early adoption of these products is the difference between traditional market hours and the 24/7 operation of many blockchain networks.

A tokenized Treasury or money-market product can give users an on-chain asset linked to traditional yield while remaining compatible with digital wallets and blockchain-based settlement. Depending on the product and platform, tokenized Treasury or money-market products may also be used as collateral within certain financial or blockchain-based systems.

Rather than requiring separate systems to confirm ownership, transfer an asset and settle payments, tokenized markets can potentially coordinate those steps on shared infrastructure.

The Bank for International Settlements (BIS) says tokenization can reduce reconciliation between institutions through a shared, tamper-evident record and make atomic settlement possible, meaning the different legs of a transaction can execute together or not at all. Smart contracts can automate processes and run around the clock.

Standardized and relatively liquid assets such as government securities have been among the financial instruments with early on-chain adoption. 

For stocks, the appeal includes more than just faster settlement. Depending on the structure or jurisdiction, tokenization can potentially support fractional ownership, longer trading windows, programmable transfers and access through digital wallets. Tokenized-equity trading volumes increased in September, although the figures alone do not establish which product features or market factors contributed to the increase.

But equities also reveal one of tokenization’s most important constraints: technology does not offer a substitute for legal ownership. A blockchain can record that a wallet controls a token, but it cannot by itself determine whether that token offers its owner shareholder voting rights, dividends, or a legally enforceable claim on an underlying share.

Those rights come from the product’s legal structure. This is one reason regulated securities infrastructure is increasingly entering the conversation. DTCC's tokenization service, for example, is explicitly designed so that DTC-issued tokens represent the same legal rights, economic interest and investor protections as their underlying securities.

The service also incorporates features such as minting, burning, pausing and clawbacks while integrating with established custody and settlement infrastructure.

That looks considerably different from the original crypto vision of replacing centralized financial infrastructure. In this model, blockchain technology becomes another component of regulated market infrastructure.

Tokenized credit is also becoming material. RWA.xyz tracked approximately $8.13 billion in distributed tokenized credit value on October 20, across categories including private credit, corporate credit, structured credit and specialty finance. CoinDesk Data's narrower September category placed tokenized private credit at $5.62 billion after 7.15% monthly growth.

Private credit is different from public equities because the underlying assets are typically much less liquid. Tokenization does not magically make an illiquid loan more liquid. A token can be technically transferable while there are still few willing buyers.

But what changes is the infrastructure surrounding the asset: ownership records, distribution, investor eligibility, collateral management and potentially secondary transfers.

In other words, tokenization can make an inefficient asset easier to administer without necessarily changing its underlying economic risk.

RWA.xyz reported approximately $5.29 billion of distributed tokenized commodity value as of October 20. CoinDesk Data’s September methodology produced a broader $6.43 billion figure for the category.
Gold-backed tokens are among the most familiar examples. The blockchain token can move continuously, but its economic credibility ultimately depends on what does not live on the blockchain: the underlying metal, custody arrangements, audits, and redemption structure.

This illustrates a principle that applies across tokenized real-world assets. The blockchain can make the representation digital. It cannot remove the need to trust the legal, custodial, and operational system connecting that representation to the real-world asset.

The most important evidence of tokenization's progress can be seen in who is building the infrastructure.

DTCC is developing tokenization capabilities within U.S. securities infrastructure. BlackRock operates a large tokenized Treasury fund. J.P. Morgan offers blockchain-based tokenization and settlement services through Kinexys. The BIS is studying tokenized deposits, central-bank money and securities as components of next-generation financial infrastructure.

For these major players, tokenization is not simply another form of speculative crypto trading. Instead, they are examining whether distributed ledgers can improve recordkeeping, collateral mobility, settlement, and the movement of money between financial assets.

There are still plenty of problems tokenization does not solve, nor is it meant to solve them. An illiquid asset does not become more liquid simply because it is tokenized. A risky borrower does not become safer. A synthetic equity token does not become an ownership interest in the underlying company just because it trades on a blockchain. A commodity token still depends on the custody of the underlying commodity.

Tokenization also depends on reliable forms of money with which tokenized assets can settle. The BIS explicitly identifies reliable on-ledger money as a prerequisite for realizing many of tokenization’s potential benefits.

That is one reason tokenized funds, stablecoins, bank deposit tokens and securities-market infrastructure are developing alongside one another. Still, tokenization has legal, liquidity and operational questions to answer.

But it is no longer valid to describe it as theoretical.

Disclaimer: Data and figures in this article are based on the cited sources and were current as of the dates referenced. Market data, tokenized asset values, trading volumes and product information may change over time. Different data providers may also use different methodologies and classifications, so figures may not be directly comparable across sources.