Financial Product Tokenization

Definition ∞ Financial product tokenization is the process of converting traditional financial assets, such as real estate, bonds, or equities, into digital tokens on a blockchain. Each token represents a fractional or complete ownership stake in the underlying asset, enabling greater liquidity, transparency, and fractionalization. This method facilitates new forms of investment and trading through distributed ledger technology.
Context ∞ Crypto news frequently discusses financial product tokenization as a significant application of blockchain technology, aiming to modernize conventional financial markets. The situation involves overcoming regulatory hurdles and establishing clear legal frameworks for the ownership and transfer of these digital representations. A critical future development includes the widespread adoption of tokenized securities, leading to more efficient and accessible global financial instruments.