What is asset tokenization

Shares, bonds, fund units, real estate, receivables. Almost every financial asset already exists as a record in some system: a company’s shareholder register, an account at a bookkeeping agent, a property registration at a notary’s registry office. Tokenization proposes to change where and how that record is kept.

This article explains the concept, the most common models, what tokenization changes and what it does not, and how the Brazilian regulator sees the subject. The references are documents from the International Monetary Fund (IMF), the International Organization of Securities Commissions (IOSCO) and the CVM (Comissão de Valores Mobiliários, Brazil’s securities regulator).

The concept in one sentence

The IMF defines tokenization as recording and transferring assets on a digital ledger that is “widely shared and trusted” and can be programmed (IMF, FinTech Note 2025/001, January 2025).

Three terms in this definition deserve explanation:

• A digital ledger is a record of who owns what. In tokenization, it is usually a distributed ledger technology (DLT) network, of which blockchain is the best-known type. Instead of a single database controlled by one institution, several parties keep synchronized copies of the same record.
• A token is the unit recorded on that network. It works as a “digital receipt” that shows who holds a given right.
• Programmable means rules can be built into the token through smart contracts, programs that execute actions automatically when conditions are met, such as paying interest on a date or blocking sales to anyone who has not completed onboarding checks. There is an explainer on them in smart contracts.

The CVM, in its Guidance Opinion 40 (Parecer de Orientação 40) of 2022, uses an even shorter definition, attributed to IOSCO: tokenization is the process of digitally representing an asset or the ownership of an asset.

An example to make it concrete

Imagine a company that wants to raise money by issuing a bond. In the traditional model, the bond is registered in a centralized depository system, and each investor appears in the records of a broker or a bookkeeping agent.

In the tokenized version, each fraction of the bond becomes a token on a network. Ownership of each token is visible in the network’s record. Transfers between investors can be made on the network itself, and interest payments can be triggered by a smart contract.

The bond is still the same type of debt, with the same debtor. What changed was the recording and transfer infrastructure.

Tokenization models

IOSCO’s final report on the tokenization of financial assets (FR/17/25, November 2025) describes three models for fixed-income securities. They help show that “tokenized” can mean quite different things:

1. Books and records model. The network is used only in stages before issuance, such as organizing documents. IOSCO classifies it as relatively limited.
2. Digital twin. The asset is issued the traditional way, off-chain, and the token is a digital representation of it. It is useful, for example, for moving collateral or simplifying post-trade processes, but issuance itself barely changes.
3. Digital native. The asset is born on the network. This is the model that, according to IOSCO, seeks to capture all the promised benefits, such as cheaper issuance and new types of securities.

The difference matters to you because it defines what the token actually gives you. In the digital twin, there is an “official” record off-chain, and you need to know which of the two prevails if they diverge. In the native model, the on-chain record is the asset itself.

For investment funds, IOSCO points to a similar logic: in many cases only the fund units are tokenized, while the fund’s portfolio is still managed the traditional way.

What can be tokenized

In theory, any right that can be recorded. In practice, IOSCO notes that fixed-income securities and short-term liquidity funds lead commercial adoption. Other uses frequently discussed are:

• Real estate, usually through shares in a company or a security linked to the property, rather than the property itself. The topic is covered in how real estate tokenization works.
• Receivables, amounts a company is owed by customers, turned into securities for investors. See receivables tokenization.
• Money, in the case of stablecoins and central bank digital currency projects such as Drex, Brazil’s digital real initiative.

Guidance Opinion 40 classifies tokens by function into three groups, which may overlap: payment tokens, which try to replicate the functions of money; utility tokens, used to access products or services; and asset-referenced tokens, which represent one or more assets, tangible or intangible. It is in this last group that the CVM places security tokens, stablecoins, NFTs and assets that are the subject of tokenization.

What tokenization can change

The benefits cited in the documents consulted are potential, not guaranteed:

• Cost. The IMF assesses that issuing, administering and redeeming assets could become cheaper with fewer intermediaries.
• Settlement. The exchange of the asset and the payment can happen at the same time, which reduces the risk of one party delivering and the other not paying.
• Fractionalization. Expensive assets can be divided into smaller fractions. The topic is explored in fractional asset ownership.
• Programmability. Events such as interest payments and transfer restrictions can be automated.

The same IMF note adds a caveat: some inefficiencies would decrease, others would remain and “new inefficiencies could emerge.” IOSCO, for its part, notes that the ecosystem “is still nascent” and represents a small part of the financial sector. According to the report, the distribution and secondary trading of tokens still rely largely on traditional infrastructure and intermediaries, and the lack of communication between blockchains fragments liquidity.

What tokenization does not change

The token does not improve the asset. If the debtor company does not pay, the debt token does not pay. If the property sits empty, no rent comes in. IOSCO sums it up for the case of a tokenized Swiss bond: the bond’s legal status “does not change”; tokenization changes the format in which it is held and settled, not the nature of the debt.

On top of the asset’s risks, the technology adds its own: smart contract bugs, lost access keys, dependence on custodians and on whoever operates the network. The IMF mentions “faulty code” and chains of interdependent contracts among the specific risks. You can lose the entire amount invested in a tokenized asset, as with any other. This point is detailed in why tokenization does not eliminate risk.

How the CVM sees tokenization

The central point of Guidance Opinion 40 is this: the fact that an asset is offered digitally, by cryptographic means or on a distributed ledger “is irrelevant” to deciding whether it is a security. What matters is the economic substance of the rights the token gives its buyer.

Two practical consequences follow:

• Tokenization itself does not require prior approval from the CVM. But if the token is a security and there is a public offering, the issuer and the offering follow capital markets rules.
• Activities around these tokens, such as intermediation, custody, bookkeeping and trading on an organized market, remain subject to their own rules, even when using new technology.

The CVM is also following the subject experimentally. In September 2026, the agency’s Tokenization Working Group delivered to its Board of Commissioners (the Colegiado) a draft “CVM DLT Pilot Program” to test the issuance, trading, custody and settlement of shares, debentures, receivables certificates and fund units on distributed ledger networks (CVM, September 16, 2026). As of the date of the news release, the draft had only been delivered to the Board, with no information on approval. The full regulatory picture is in tokenization and capital markets: regulatory limits.

Questions to ask before buying a token

If a platform offers you a tokenized asset, these questions help separate the technology from the investment:

• What right does the token give me? Ownership, a credit claim, a share of profits, just access to a service? Where is that written?
• Which record prevails? The network’s or a traditional record outside it? What happens if the two diverge?
• Who is the issuer and who holds the asset? Is there a segregated estate, or are the assets mixed with the platform’s?
• Is the offering compliant? If the token is a security, the offering must follow CVM rules. Check with the regulator if in doubt.
• Can I sell it? Is there a real secondary market, or does liquidity depend on the platform itself buying it back?

Key takeaways

• Tokenization is a change in how rights are recorded and transferred, not a new type of asset.
• “Tokenized” can mean a digital mirror of a traditional asset or an asset born on the network. The buyer’s rights depend on that design and on the contracts.
• In Brazil, the CVM looks at the token’s economic content, not the technology. The cost and liquidity benefits are potential and, according to international bodies, still largely unproven at scale.