Tokenization Explained: Stocks, Real Estate and Gold on the Blockchain

What is tokenization?

A token is a unit recorded on a blockchain. Tokenization is the process of creating tokens that represent something outside the blockchain, such as a share in a company, a fraction of a property or ownership of gold held in a vault. People often call these real-world assets, or RWAs.

The key idea is simple: the blockchain records who holds the token, but the law and the issuer decide what the token is worth and what rights it gives you. If the company behind a token fails, or the asset behind it is not really there, the token on its own does not fix that.

Why people are interested in it

• Smaller pieces: an asset can be split into small units, so more people can hold a part of it.
• Faster settlement: tokens can move at any hour, including weekends, instead of waiting for a market to open.
• Programmability: rules, such as who can hold a token or when it pays out, can be built into the code.
• Global access: in theory a person anywhere with a wallet can hold the token. In practice, many products are limited by country and by investor type.

These are the reasons given by the companies building this. Whether they are delivered depends on each product, so treat them as claims to check, not guarantees.

How big is it?

Estimates of the tokenized real-world asset market differ widely, from roughly twenty billion to several tens of billions of US dollars in 2026, depending on which tracker you use and what it counts. Most estimates leave out stablecoins. Tokenized government bonds and money market funds are the largest category, followed by gold, then a much smaller amount of tokenized stocks. We do not give a single figure here because it changes quickly and sources disagree. If you need a number, check a live tracker such as rwa.xyz.

Stocks, real estate and gold side by side

Tokenized gold

Gold is the clearest case because the asset is simple and the token can be backed by bars in a vault. For example, PAX Gold (PAXG), issued by Paxos Trust Company, says each token represents one fine troy ounce of gold held in London vaults, and that the gold is audited monthly. Paxos says holders can redeem tokens for gold bars or for US dollars. Other issuers, such as Tether with its gold token, offer similar products.

What to check for any gold token:

• Who is the issuer, and which regulator supervises them?
• Is the gold allocated to specific bars, or pooled?
• How often is the gold audited or attested, and where are the reports?
• What are the fees for storage, trading and redemption?
• Is the product available where you live? For example, Paxos says PAX Gold is not currently available in the EU.

Tokenized stocks

This is the area with the most confusion, because two very different products share the same label. In its January 2026 statement on tokenized securities, the US Securities and Exchange Commission (SEC) staff said tokenized securities are still securities and remain under existing securities law. The statement describes two broad types:

• Issuer-sponsored: the company itself, or someone acting for it, issues the shares in token form. The token is another way to record the same kind of share.
• Third-party: someone other than the company creates the token. This can be a custodial product, where a third party holds the real shares and the token gives you an interest in them, or a synthetic product, which gives exposure to the share price but is not an obligation of the company that issued the share.

The SEC statement also notes that holders of third-party tokens can face risks, such as the bankruptcy of the third party, that holders of the real share would not necessarily face. A token that tracks a price may not give you the voting rights or dividends of a real share, and it may not be sold to people in some countries. In the United States, the rules for third-party tokenized stocks are still being worked out, so check the current position before you assume anything.

Large exchanges and market infrastructure companies have also announced or reported work on tokenized trading, and some brokers and crypto exchanges already offer tokenized stocks to customers in certain regions, such as parts of Europe. These developments are moving quickly, so use the company's own pages and the regulator's site for the latest.

Tokenized real estate

Here, a platform divides ownership of a property into tokens and sells them to investors, sometimes with rental income paid out in stablecoins or other tokens. The idea is fractional ownership with a lower minimum than buying a whole property.

Real estate has extra hurdles compared with gold:

• Legal title. Property law is local. In many places, recording a token transfer on a blockchain does not by itself change who legally owns the building. The platform usually holds the property in a company, and you own part of that company. Check what you actually own.
• Securities rules. A fractional stake that depends on the platform's work to produce income is often treated as a security, so the platform may need to register or use an exemption. Some platforms are not available to investors in certain countries. Always check that the platform is allowed to sell to you.
• Liquidity. Tokenizing a property changes how it is recorded, not how easy it is to sell. Secondary markets for single-property tokens are often thin, so you may not be able to sell when you want to.
• Platform and property risk. Rent can be late, repairs and legal disputes can reduce income, and a platform can run into trouble. There have been cases of platforms pausing payouts, so read a platform's recent updates before relying on its income claims.
• Local rules. Regulators in different countries treat fractional property differently. For example, India has a regulated route through small and medium REITs, and the EU treats many tokenized property products as financial instruments. Check the rules where you live.

The quiet leader: tokenized treasuries and money funds

The biggest part of tokenization so far is not stocks or buildings. It is short-term government debt held through money market funds. BlackRock, the world's largest asset manager, launched a tokenized fund called BUIDL in 2024 on the Ethereum network, working with the tokenization company Securitize. Products like this let institutions hold and move shares of a cash-like fund on a blockchain. They are mainly for qualified, larger investors, not for the general public.

This matters for the whole topic because it shows what tokenization is good at today: taking a familiar, well-regulated asset and recording it in a faster way. It is less about creating new kinds of investments and more about changing the plumbing.

The main risks, in one list

• Issuer and custodian risk: the token is only as good as the company that issues it and holds the asset.
• Legal risk: your rights may differ from what you expect, and rules can change.
• Liquidity risk: some tokens trade rarely, so you may not be able to exit at a fair price.
• Smart contract and security risk: code can have bugs, and wallets can be hacked or lost.
• Regional limits: many products are not offered in every country.
• Tax: tokens can create tax events in ways that differ from the underlying asset. Ask a qualified tax adviser where you live.

A checklist for any tokenized asset

1. What exactly does the token represent: the asset itself, a claim on a company, or just its price?
2. Who issues it, who holds the real asset, and who supervises them?
3. Where are the legal documents, and do they say what happens if the issuer fails?
4. Can I legally buy this where I live, and can I sell it when I need to?
5. What are all the fees, including trading, custody and redemption?
6. Where are the audit or attestation reports, and how recent are they?

Using AI to read the documents

AI assistants are useful for summarising long legal documents, such as a token's terms or a fund's prospectus. Upload the document, ask for what the token holder owns, the fees, the redemption rules and the stated risks, and ask the tool to quote the page for each answer. Then open those pages yourself. AI can misread legal language, so treat its summary as a map, not as the answer. Our guides on using Claude for investing research and uploading an annual report to Claude show the method.