Tokenized Liabilities

Definition ∞ Tokenized liabilities are financial obligations or debts that are represented as digital tokens on a blockchain. These tokens can be traded, managed, and settled using distributed ledger technology, offering potential for increased transparency and efficiency. Examples include tokenized bonds, loans, or other forms of debt instruments. They convert traditional financial commitments into digital assets.
Context ∞ The tokenization of liabilities is a growing area of interest for financial institutions seeking to modernize debt markets and improve settlement processes. Discussions often center on the legal and regulatory frameworks required to support these digital representations of debt. This development holds potential for creating more liquid and accessible markets for various financial obligations.