Real-World Asset Tokenization: The Future of Digital Investments

Imagine owning gold, bonds, and even real estate in the form of digital tokens. You wouldn't have to go through the complicated purchasing process, deal with third parties, or wait for days to liquidate your assets if you suddenly needed funds.

All of this is possible with real-world asset tokenization. What types of assets can be tokenized, and how does it work? Before investing, learn about real-world asset tokenization in this article!

Brief Summary:

1. Real-world asset tokenization is the process of representing physical assets as digital tokens stored on a blockchain.
2. Real asset tokenization unlocks global investment opportunities, speeds up and simplifies transactions, and increases transparency.
3. Types of assets that can be tokenized include stocks, bonds, works of art, and even intellectual property rights.

What is Real-World Asset Tokenization?

Definition of Real-World Asset Tokenization

Real-world asset tokens are blockchain-based digital tokens that represent physical, traditional assets such as cash, commodities, equities, stocks, credit, artwork, and even intellectual property (IP). Assets can be purchased in whole or in part (fractional ownership).

Real-world assets that have been tokenized are easier to access, trade, and manage. Of course, just like other digital tokens on the blockchain, real-world asset tokenization is protected by cryptography and decentralized consensus. This creates many new opportunities for blockchain-based financial services and non-financial uses.

Benefits of Real-World Asset Tokenization

Real-world asset tokenization offers tangible benefits, such as:

1. Liquidity: Real-world asset tokenization increases market liquidity for assets that are typically illiquid.
2. Transparency: With on-chain representations, physical assets can be audited and managed more transparently. All activities of buying and selling are viewable by anyone.
3. Accessibility: Global access to physical assets becomes easier through blockchain-based applications. Additionally, an asset does not have to be purchased in its entirety, granting investment opportunities for novice investors who lack large capital.

How Real-World Asset Tokenization Works

Real-world asset tokenization works as a representation of ownership rights over an asset. In the tokenization process, a digital representation of an asset is created as a bridge between physical and digital assets.

Asset Selection and Evaluation

Real-world asset tokenization begins with selecting asset types with strong tokenization potential, such as real estate, high-value artworks, commodities, and precious metals. The value of these assets is analyzed and documented in accordance with standard financial practices.

Legal Frameworking

Tokenized assets must still follow a set of regulations to ensure that the digital tokens are valid and truly representative of the underlying asset. At this stage, the rights associated with the tokens are defined. The three types of rights that can be tokenized are:

1. Financial rights
2. Ownership rights
3. Usage rights

Furthermore, there are two common structures for real-world asset tokenization.

1. Special Purpose Vehicle (SPV) Tokenization: Also known as indirect tokenization, this approach is used when assets are held by an entity. The entity is tokenized, and tokens are issued through a pool of funds from investors. Investors receive indirect interest through the real assets underlying the tokens.
2. Direct Asset Tokenization: In this approach, instead of tokenizing the entity that holds an asset, the asset itself is tokenized. The tokens represent direct ownership of the underlying asset.

Smart Contract Implementation

The issuance, balance tracking, and payouts of a token representing real assets are regulated by a smart contract. For example, a real estate token has a smart contract that automates the distribution of rental income.

Also Read: What is a Smart Contract? A Complete Guide

Custody of Real-World Assets and Tokens

Before the digital version of an asset is created on the blockchain, the underlying asset is stored and managed by a trusted custodian or manager. After that, real-world asset tokens can be managed independently (self-custody) or managed by a third-party custodian.

1. Self-Custody: Token owners have full control over their private keys and asset management.
2. Third-Party Custodian: Licensed custodians provide asset management services, suitable for users who do not want to take the risk of holding and managing their assets themselves.

Token Issuance

Asset ownership representation is formed into digital tokens called RWA (real-world asset) tokens. Tokens are issued on the issuer’s website or on licensed real-world asset tokenization platforms.

Primary Token Offering

After real-world asset tokens are issued, they are sold to investors through a primary offering. Once issued, tokens can also be traded on secondary markets.

Examples of Assets that Can be Tokenized

Technically, any asset with a selling value can be tokenized. Here are some examples of popular real-world asset tokenization.

Real Estate

Tokenized real estate can be purchased in fractions. This allows investors from around the world to own a digital share of a real estate. The concept of real estate tokenization was pioneered by platforms such as RealtyShares and Harbor.

Financial Instruments

The tokenization of real-world assets is transforming the way traditional financial assets are traded and managed. Now, stocks, bonds, and derivatives can be tokenized on platforms such as Kaleido, allowing entrepreneurs to tap into new sources of funding.

Art and Collectibles

Similar to real estate, art and collectibles can be owned fractionally through platforms such as Maecenas and Masterworks. Art tokenization is suitable for investment and portfolio diversification, and it unlocks a new way to participate in the art market.

Precious Metals

Precious metals such as gold and silver have long been used as traditional investment instruments, but they lack liquidity. Precious metal tokenization provides a solution to this problem.

Currently, the most tokenized precious metal is gold, as seen in Paxos Gold (PAXG) and Matrixdock’s XAUm. In addition to gold, there is also silver tokenization, such as tSilver (tXAG), and platinum tokenization, for example, tPLATINUM (TXPT).

Intellectual Property

Intellectual property rights can be tokenized to monetize and protect patents, copyrights, and trademarks. The trading of tokenized patents and intellectual assets is facilitated by projects such as IPwe.

Carbon Credit

Carbon credits are financial instruments that represent a company's right to emit a certain amount of greenhouse gases or carbon dioxide in its operations. Just like regular financial instruments, carbon credits can be traded for carbon offset purposes.

The tokenization of carbon credits makes this trading activity more transparent and efficient. Even small companies can buy or sell carbon credits in smaller denominations. Platforms that support carbon credit tokenization include Carbonmark and EcoRegistry.

Economic Opportunities of Real-World Asset Tokenization

ARK Invest's Big Ideas 2026 report shows that the market value of real-world asset tokenization reached $19 billion in 2025. This is because real-world asset tokenization provides various advantages in terms of accessibility, efficiency, and transparency.

Democratizing access to financial markets

Previously, certain asset classes, such as real estate, commodities, and venture capital, were only accessible to companies or high-end investors. The average investor is still hindered by large capital requirements, regulatory barriers, and limited access to the global market.

One of the biggest advantages of real-world asset tokenization is that it provides equal opportunities for all investors, both institutional and retail. Assets can be fragmented into smaller, cheaper units. Now, all anyone needs is internet access to invest in financial assets.

Cheap and efficient transactions

The financial system is complex, leading to lengthy and expensive trading processes. Meanwhile, various tokenization processes are automated by smart contracts, reducing human error and operational costs.

Faster transaction settlement times

In traditional markets, settling transactions can take days because they involve multiple parties. Meanwhile, real-world asset tokenization verifies and settles transactions almost in real-time on the blockchain.

Market transparency

Real-world asset tokenization offers a transparent buying and selling experience. Anyone can view the transaction history, when it occurred, who was involved, and even the buying price.

For investors, transparency builds trust, as real-world asset tokenization transactions are resistant to fraud or manipulation. Meanwhile, for law enforcement, transparency supports easier auditing processes.

Regulation of Real-World Asset Tokenization

Key Legal Principles in Real-World Asset Tokenization

One of the biggest challenges of real-world asset tokenization is the difference in regulations between countries regarding asset ownership. In general, there are three key legal principles involved in real-world asset tokenization.

1. Property Rights: When an asset is represented by a digital token, there must be clarification regarding who own what. The law must determine whether the token only represents ownership or actually grants real rights.
2. Contract Law: Smart contracts automate real-world asset tokenization transactions, but their validity and enforceability from a legal perspective are still debated.
3. Securities Law: Real-world asset tokenization can be classified as securities, depending on its structure. If so, the tokens and their owner must comply with various legal regulations.

Real-World Asset Tokenization in Indonesia

How is real-world asset tokenization regulated in Indonesia? According to Otoritas Jasa Keuangan (OJK), real-world asset tokenization is currently in the regulatory sandbox phase, with a focus on tokenized gold, property, and government securities. Furthermore, several real-world asset tokenization business models have passed the sandbox phase in 2025.

Conclusion

Real-world asset tokenization is an innovation that carries billions of dollars in physical assets into the blockchain ecosystem. It unlocks access to global investors, speeds up transactions, and increases transparency.

Currently, real estate, precious metals, and financial instruments dominate real-world asset tokenization. However, other types of investment assets may also be tokenized. Someday, we may see the tokenization of oil, jewelry, or even vintage cars.