What is tokenization?

Tokenization means recording ownership of an asset, such as a bond, a share in a fund, gold or a building, as a token on a blockchain. The token is a digital certificate: whoever holds it owns that piece of the asset.

The promise is speed and access. Tokens can settle in minutes instead of days, trade around the clock, and be split into small pieces, so an investor could own a slice of a commercial building for the price of a phone. Large banks and fund managers already issue tokenized money-market funds and bonds, and central banks are testing it through BIS Innovation Hub projects.

The legal side matters as much as the technology. A token is only worth something if the law recognises it as ownership of the real asset, and if someone is responsible for keeping the asset safe. That is why regulators, including Pakistan's PVARA and SECP, are writing rules for who may issue and trade tokenized assets.

Tokenization is still early. Most tokenized assets trade in small volumes, and selling them quickly can be hard.