At its core, tokenization transforms traditional assets into digital tokens that can be traded on a blockchain. Whether it be real estate, debt, bonds or shares of a company, tokenization brings efficiency and transparency to these processes. It also broadens retail investors’ access to these asset classes. A new research report by Brickken and Cointelegraph Research surveys the underlying business models and provides an in-depth analysis of why many TradFi firms are jumping on the tokenization trend.
The anatomy of tokenized asset issuance
The journey begins with deal structuring, where the asset, be it a property, a bond or a private equity fund, is identified and legally organized. Often, the asset is held by a so-called Special Purpose Vehicle (SPV), a dedicated legal entity designed to protect investor rights.
Once the groundwork is laid, the asset enters the digitization phase and is recorded onchain. After being minted, smart contracts can automate processes such as compliance checks, dividend payments and shareholder voting. This automation slashes administrative costs and eliminates inefficiencies, making the system faster and more reliable.
During primary distribution, tokens are issued to investors in exchange for capital. This is akin to the digital version of an initial public offering (IPO). Investors complete Know Your Customer checks, receive tokens representing fractional ownership and gain instant access to a secure, transparent, blockchain-based record of their investment.
After the initial issuance, the tokens are managed through post-tokenization activities. The distribution of dividends, shareholder votes and ownership changes are all automated via smart contracts. Secondary trading platforms can provide additional, liquid off-ramps for investors looking to cash out. Instead of waiting months or even years to sell traditional assets, tokenized assets can be traded with the click of a button.
Revolutionizing asset classes through tokenization
Tokenization isn’t limited to a single type of asset. From real estate to debt instruments and even carbon credits, its potential applications are nearly endless.
Debt tokenization is a game-changer in the traditional capital markets. By representing bonds or loans as digital tokens, issuers simplify trading and bring much-needed liquidity to these traditionally static assets. A notable example is the European Investment Bank, which issued a 100 million euro digital bond on the Ethereum blockchain, a clear sign of how tokenization is modernizing financial instruments.
The world of fund management is also beginning to see a seismic shift. Tokenized funds such as Franklin Templeton’s OnChain US Government Money Fund use blockchain technology to process transactions and manage share ownership. According to Security Token Market, over $50 billion worth of assets across all asset classes were tokenized by the end of 2024, with $30 billion coming from real estate. As more institutions embrace blockchain technology, these figures are expected to skyrocket in 2025.
Tokenization is no longer a theoretical concept, a non-profitable sector or a niche market. It’s been tested, fine-tuned and is poised to reshape the financial landscape. With streamlined processes, enhanced liquidity and broader access, this technology is unlocking opportunities that were once out of reach.
As 2025 continues, we can expect even greater adoption across asset classes, deeper integration with DeFi platforms and more innovation in tokenized markets. For both traditional and institutional investors, the future of tokenization looks promising.
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