Tokenized Financial Instruments

Definition ∞ Tokenized financial instruments are traditional financial assets, such as stocks, bonds, or real estate, that are digitally represented on a blockchain as tokens. These tokens carry the same rights and obligations as their conventional counterparts but benefit from blockchain’s efficiencies, including fractional ownership, increased liquidity, and automated settlement. They enable new forms of ownership and trading previously unavailable in traditional markets. The process involves converting real-world assets into digital tokens.
Context ∞ News frequently highlights the growing interest in tokenized financial instruments as a bridge between traditional finance and the digital asset world. Discussions often revolve around the regulatory clarity required for their widespread adoption and the technological standards for their issuance and trading. These instruments are considered a key component in the evolution of capital markets and decentralized finance.