Tokenizing Securities

Critic

Senator Elizabeth Warren (concerns over consumer protection in fintech)

Proponent

Vlad Tenev (CEO of Robinhood)

Definition

Traditional financial assets (like stocks, bonds, or real estate) converted into digital tokens on a blockchain, representing ownership rights to an underlying asset.

Key Benefits

Fractional ownership, access to private company shares, greater liquidity, 24/7 trading, transparency, reduced settlement delays, automated asset servicing, custody, and trustee tasks.

Regulatory Landscape

Must comply with existing securities regulations, faces regulatory uncertainty, requires relaxation of accreditation standards (advocated by Vlad Tenev).

Underlying Technology

Blockchain, Distributed Ledger Technology (DLT)

Examples of Tokenizable Assets

Equity (shares in private or public companies), Debt instruments (bonds, notes), Real estate, Fine art, Investment funds.

Initial Launch Region (Robinhood)

Europe

Target Expansion Region (Robinhood)

US

Undated

Ongoing

Tokenized securities are traditional financial assets (like stocks, bonds, or real estate) that have been converted into digital tokens on a blockchain. They represent ownership rights to an underlying asset, just like conventional securities, but with the technological advantages of blockchain. Key point: Tokenized securities blend traditional finance with blockchain technology, creating digital versions of familiar investment vehicles. [...] Tokenized securities are digital representations of traditional financial assets like stocks, bonds, or real estate, issued on blockchain networks to offer benefits such as fractional ownership, 24/7 trading, and greater transparency. While they enhance access and efficiency in investing, they must comply with existing securities regulations and carry unique risks like regulatory uncertainty, technical vulnerabilities, and liquidity challenges. ### Table of Contents [...] The technology enables not just new investment options but potentially helps solve long-standing issues in financial markets like settlement delays, opacity, and access limitations. For the crypto-savvy investor, understanding tokenized securities adds a valuable dimension to your investment knowledge — connecting the innovation of blockchain with the established world of regulated investments.

Tokenized securities are \\digital tokens that represent ownership in real-world financial assets\\. They’re created using blockchain technology, but they function just like traditional securities from a legal and regulatory standpoint. In other words, if you tokenize a share of stock, it’s still a stock. If you tokenize a bond, it’s still a bond. The token changes how it’s issued, tracked, and traded, but not the nature of the asset. ### Where Are Tokenized Securities Held? [...] Tokenized securities are just digital representations of traditional financial assets. Almost anything with defined ownership rights can be tokenized and issued on a blockchain, provided the legal and regulatory framework supports it. Here are some common examples of what can be tokenized: \ \\Equity:\\ Shares in private or public companies \ \\Debt instruments:\\ Bonds, notes, or other fixed-income products [...] In many of these examples, tokenizing the asset results in a tokenized security, particularly when the token grants investors ownership rights, profit participation, or voting power. That includes tokenized stock, debt, and most fund structures.

Home Glossary Tokenized Securities # Tokenized Securities Moderate Tokenized securities are when the ownership of a security is materialized through the issuance of a token. ## What Are Tokenized Securities? Tokenized securities are when the ownership of a security is materialized through the issuance of a token that is registered on a distributed ledger technology (DLT) infrastructure of blockchain. A tokenized security can be equity, a bond or an investment fund. [...] Tokenization is the process of converting ownership rights to an asset into a token. A tokenized security is essentially this blockchain-based tradable financial asset that can represent an investment in another asset. [...] Discussing tokenized securities even further, they can also represent ownership in assets that are liquid, such as real estate and fine art. These tokens can then be traded easily which reduces the barriers of entry into the markets.

Benefits A new “token economy” offers the potential for a more efficient and fair financial world by greatly reducing the friction involved in the creation, buying, and selling of securities. We see four key advantages that tokenization provides for both investors and sellers: • • Greater liquidity By tokenizing assets—especially private securities or typically illiquid assets such as fine art—these tokens can be then be traded on a secondary market of the issuer’s choice. This access to a [...] The tokenization of assets refers to the process of issuing a blockchain token (specifically, a security token) that digitally represents a real tradable asset—in many ways similar to the traditional process of securitization, with a modern twist. These security tokens are created through a type of initial coin offering (ICO) sometimes referred to as a security token offering (STO) to distinguish it from other types of ICOs, which can produce different tokens such as equity, utility, or payment