Dematerialization

Definition ∞ Dematerialization refers to the process of converting physical or paper-based assets into electronic or digital form. In finance, this involves replacing physical certificates for securities with electronic records, streamlining ownership transfer and reducing administrative burdens. For digital assets, it signifies the digital representation of real-world assets on a blockchain, such as tokenized real estate or commodities. This transformation enhances efficiency, reduces costs, and improves security by removing physical handling requirements.
Context ∞ Dematerialization is a continuing trend in global finance, with digital assets accelerating its application to a broader range of asset classes. The tokenization of traditional assets on blockchain platforms represents a new frontier in this process, promising increased liquidity and fractional ownership possibilities. Regulatory bodies are working to establish legal and operational frameworks to accommodate the digital representation of assets across various markets.