DIGITAL MONEY AND TOKENIZED ASSETS

Tokenization

The process of representing ownership rights to a financial or physical asset as a digital token on a blockchain, enabling programmable transfer, fractionalization, and 24/7 settlement without traditional intermediaries.

EXAMPLE

J.P. Morgan's Kinexys platform uses tokenization to enable intraday repo settlement of money market fund shares as on-chain collateral.

Relevant Roles and Functions

On-chain Role
Digital Asset Markets
Head of Tokenization
Function
Digital Securities Infrastructure
Tokenized Bond
Tokenized Funds
Tokenized Treasuries
TradFi Equivalent
Asset Servicing / Custody
Capital Markets
Securities Issuance
Structured Products

Related Terms

Real-World Asset

A traditional financial or physical asset—such as a government bond, real estate, private credit facility, or trade receivable—that has been tokenized and represented on a blockchain for on-chain trading, settlement, or collateral use.

Example

BlackRock's BUIDL fund tokenizes U.S. Treasury exposure, allowing institutions to use the token as real-time on-chain collateral instead of wiring cash.

Tokenized Deposit

A bank-issued, blockchain-based representation of a commercial bank deposit that moves on distributed ledger infrastructure while remaining a liability of the issuing bank—distinct from a stablecoin, which is typically issued by a non-bank entity.

Example

Citi's tokenized deposit pilot allows corporate clients to move cash between subsidiaries in real time on a permissioned ledger, with the same credit standing as a traditional deposit.

Programmable Money

Digital currency—whether a stablecoin, tokenized deposit, or CBDC—embedded with conditional logic via smart contracts, enabling automatic execution of payments or transfers when specified conditions are met.

Example

With programmable money, a corporate treasury can instruct a stablecoin to automatically fund a supplier invoice upon confirmed delivery, without manual approval.

Atomic Settlement

The simultaneous, conditional exchange of two assets in a single blockchain transaction—both legs complete or neither does—eliminating the gap between trade execution and final settlement that creates counterparty risk in traditional markets.

Example

Atomic settlement of tokenized Treasuries versus stablecoins achieves true delivery-versus-payment with no T+1 lag and no central counterparty required.

Fractionalization

Dividing a high-value asset into smaller, tradeable units via tokenization, reducing minimum investment thresholds and enabling broader distribution of previously illiquid or wholesale-only asset classes.

Example

Fractionalization of a $50M private credit facility into $1,000 tokens allows wealth management platforms to offer exposure to institutional-grade credit within retail-friendly minimums.