What are RWAs and tokenization?

RWA tokens can relate to securities, fund shares or commodities. “Real-world” does not mean only tangible objects: financial claims can fall within the category too. Tokenization creates a digital representation of an asset or a right.

The BIS discussion of tokenization examines claims represented on programmable platforms. A public blockchain is not essential to every tokenization model. Product documents and operating arrangements determine which rights actually transfer when a token changes hands.

Example: a token representing one gram of gold

Suppose a hypothetical issuer says each token corresponds to one gram of gold held by a custodian. Buying the token does not automatically prove that its holder can redeem the metal under every circumstance; backing, custody and redemption terms need examination. If the issuer fails to meet its obligations, the on-chain record alone cannot deliver gold from a vault.

Larry Fink’s views on tokenization illustrate the debate in traditional finance. Easier digital transfer does not remove the underlying asset’s price risk or exposure to counterparties.

For a concrete fund-share example, see our report on ARKVX fund shares moving onto Ethereum; the investor’s rights must be read alongside the token record.