Definition ∞ Credit product tokenization involves representing traditional credit instruments, such as loans or bonds, as digital tokens on a blockchain. This process converts rights to a credit product into a transferable digital asset. Tokenization can fractionalize ownership, increase liquidity, and streamline administrative processes.
Context ∞ Credit product tokenization is a significant trend aimed at bridging traditional finance with decentralized finance. Discussions often center on the legal and regulatory frameworks required to support these digital representations, particularly regarding ownership rights and enforcement. The critical future development lies in establishing standardized protocols and robust legal assurances for these tokenized assets.
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