This is the glossary of tokenization terms. Next step: browse the directory or read the newsletter →
Tokenization glossary
Short, plain-English definitions of the terms used across the Hub and the newsletter. Terms: 32.
- Allowlist
- A list of wallet addresses approved to hold or receive a token, typically after identity and eligibility checks. Also called a whitelist.
- AML (anti-money laundering)
- Rules and controls that detect and prevent money laundering and terrorist financing, including screening wallet addresses and transactions.
- Atomic settlement
- Settlement where both legs of a trade complete together in one transaction or not at all, which shared ledgers make possible.
- Blockchain
- A shared ledger, kept in sync across many computers, where records are grouped into blocks and are very hard to alter once confirmed.
- Custody
- Safekeeping of assets for others. For tokens this means control of the private keys; for tokenized funds the underlying assets also need a custodian.
- Delivery versus payment (DvP)
- A settlement method in which the asset is delivered only if payment is made, removing the risk that one side pays and the other does not deliver.
- Distributed vs represented assets
- A distinction used by RWA.xyz: distributed tokens can move to wallets beyond the issuer's platform, while represented assets use a blockchain mainly as a record.
- ERC-3643
- An Ethereum token standard for permissioned tokens that checks on-chain identity and eligibility rules before a transfer can succeed.
- EU DLT Pilot Regime
- Regulation (EU) 2022/858, applying since 23 March 2023, which lets licensed firms run blockchain-based trading and settlement systems for securities.
- Fractional ownership
- Splitting an asset into many small units so that several investors can each hold a share. Tokens make the units easier to record and transfer.
- KYC (Know Your Customer)
- Checks that verify a customer's identity and eligibility before they can open an account or hold a regulated token.
- Legal wrapper (SPV)
- A legal entity, such as a company, trust or special purpose vehicle, that holds the asset and issues the interests the tokens represent.
- MiCA
- The EU Markets in Crypto-Assets Regulation (EU) 2023/1114. It covers crypto-assets and stablecoins that are not already regulated as financial instruments.
- Minting and burning
- Creating new tokens (minting) when assets are added or investors subscribe, and destroying tokens (burning) on redemption.
- Model Context Protocol (MCP)
- An open standard for connecting AI assistants to external tools and data sources, used by some RWA data providers to serve AI agents.
- The value of a fund's assets minus its liabilities, usually expressed per share. Tokenized funds often publish NAV through oracles.
- Oracle
- A service that brings off-chain data, such as prices, net asset values or reserve reports, on-chain so smart contracts can use it.
- Permissioned blockchain
- A blockchain where only approved participants may run nodes, validate transactions or, in some cases, read the ledger.
- Private key
- A secret number that authorizes transactions from a blockchain address. Whoever controls the private key controls the tokens.
- Proof of reserves
- Evidence, often an attestation or on-chain data feed, that an issuer holds the assets backing the tokens it has issued.
- Real-world asset (RWA)
- An asset that exists outside the blockchain, such as a bond, fund share, property or commodity, whose ownership or economic value is represented by a token.
- Secondary market
- Where investors trade an asset with each other after it has been issued. Many tokenized assets have limited secondary trading.
- Security token
- A token that represents a financial instrument, such as a share, bond or fund unit, and is therefore subject to securities law.
- Smart contract
- Code deployed on a blockchain that runs automatically when its conditions are met, for example to enforce transfer rules or pay distributions.
- Stablecoin
- A token designed to keep a stable value against a reference currency, usually by holding reserves of cash and short-term government debt.
- Token
- A unit recorded on a blockchain that can represent value, rights or access. What a token is worth in law depends on what it is linked to.
- Token standard
- A shared interface that tokens follow so wallets and applications can work with them, such as ERC-20 for fungible tokens on Ethereum.
- Tokenization
- Recording ownership of an asset, or a claim on it, as tokens on a blockchain. The legal rights still come from the documents and law behind the token.
- Tokenized deposit
- A commercial bank deposit recorded on a blockchain. It remains a liability of the bank, unlike most stablecoins, which are issued by non-banks.
- Tokenized money market fund
- A money market fund whose shares are recorded or represented as tokens, letting eligible holders keep and transfer them on a blockchain.
- Transfer agent
- A firm that keeps the official register of who owns a security and records transfers. Some transfer agents now keep that register on a blockchain.
- x402
- An open payment standard that uses the HTTP 402 Payment Required status so clients, including AI agents, can pay for web resources, typically in stablecoins.