Asset Securitization

Definition ∞ Asset securitization transforms illiquid assets into marketable securities. This process pools various financial assets, such as loans or receivables, and then issues new securities backed by the cash flows from those pooled assets. These new securities are then sold to investors, providing liquidity to the original asset holder. It permits the distribution of risk and capital efficiency within financial systems.
Context ∞ In the digital asset space, asset securitization is gaining attention as a method to tokenize real-world assets, such as real estate or intellectual property, on blockchain platforms. This allows for fractional ownership and increased liquidity for previously hard-to-trade assets. A key debate centers on the legal and regulatory frameworks required to properly manage the ownership and transfer of these tokenized securities. Future developments could include standardized protocols for on-chain securitization, expanding access to a wider range of investment opportunities.