The catch-all moniker might be viewed as shorthand for the secure transmission of information, but use cases differ, and what follows is a primer to shed some light on the finer points of this digital shift.
Different Approaches to Tokenization
Distinct tracks are developing in parallel:
- Payment Network Tokenization
Credit card networks such as Visa and Mastercard convert a card’s primary account number (PAN) into a token. That token is used in place of the real card number across digital wallets, card-on-file providers and in-store NFC payments. Visa now issues billions of tokens, roughly half of global eCommerce transactions are tokenized, with 7% growth in the last quarter alone, bringing total tokens to 15 billion.
Visa CEO Ryan McInerney said on a second-quarter 2025 earnings call with analysts in April that tokenization also plays a role in artificial intelligence-facilitated commerce.
“Visa Intelligent Commerce … enables consumers to shop and buy with AI agents,” he said. “It combines a suite of integrated APIs, including AI-ready cards with tokenization and authentication, together with a commercial partner program for AI platforms, enabling developers to deploy Visa’s AI commerce capabilities securely and at scale.”
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Mastercard reported in June that nearly half of its online transactions in Europe are tokenized, and the company is moving toward fully phasing out manual card entries by 2030.
Building on this, Mastercard in April unveiled Agent Pay, a product suite embedding programmable token services into agent-led commerce and subscription flows. The initiative positions tokenization as an enabler of new business models, from delegated payments to merchant-agnostic loyalty linking.
- Real-World Asset Tokenization
Real-world asset (RWA) tokenization involves turning tangible assets, like real estate, stocks, bonds or commodities, into tradable blockchain tokens.
Kraken, BlackRock and R3 are among firms advancing RWA tokenization. Kraken now offers tokenized U.S. equities for eligible non-U.S. clients via offshore subsidiaries, allowing 24/7 trading and settlement.
R3 and Solana are collaborating to bring regulated assets on-chain, with R3 reporting over $10 billion in regulated assets already live across its private networks.
Advantages and Challenges
Tokenization offers benefits:
- Security and fraud prevention. Network tokenization masks sensitive data and reduces fraud while increasing transaction approval rates.
- Efficiency and programmability. Asset tokenization enables instant settlement, automated compliance, 24/7 trading and fractional ownership.
Yet challenges remain:
- Regulatory and legal ambiguity. United States regulators like the Securities and Exchange Commission have not yet formalized frameworks for tokenized securities, although some officials say they are “willing to work with” different approaches.
- Technology and adoption gaps. Digital identity, on-chain privacy, smart contract security and cross-border infrastructure remain evolving areas.
Cross-Border Payments and RWA
Tokenization is also redefining global money movement. On-chain rails bypass the frictions of correspondent banking and support programmable features like real-time compliance checks.
Examples are multiplying. Vera Capital announced in April a partnership with Blocksquare to tokenize commercial real estate, and BlackRock CEO Larry Fink declared in a shareholder letter: “Every stock, every bond, every fund—every asset—can be tokenized.”
R3 and Solana’s tie-up illustrates this shift.
“The future of capital markets will be built on public infrastructure,” Solana Foundation President Lily Liu said, while R3 CEO David E. Rutter called it “a strategic realignment for the entire industry.”
Kraken’s launch of xStocks, or tokenized U.S. equities tradable 24/7, demonstrates the leap from pilot to production. Backed one-to-one by custodied shares, these tokens allow fractional ownership and instant settlement. Kraken has since announced multichain expansions, aiming to give investors a choice of blockchain ecosystems while maintaining regulatory compliance.
The Bank for International Settlements (BIS) said tokenized money and assets could reshape monetary policy and payments. A BIS study said a tokenized, unified ledger run by public authorities could replicate stablecoin benefits without private-coin risks. The BIS and Federal Reserve Bank of New York also co-authored experimental work showing how smart contracts might automate liquidity operations and policy transmission.
The Federal Reserve is likewise active, hosting workshops and joint research with the BIS on tokenization and payments modernization. Fed staff have stressed the need for interoperable standards on settlement finality, identity and dispute resolution to ensure tokenization scales responsibly.
Through Project Pine, which offers a prototypical tokenization “toolkit” to pay interest on reserves, there’s the exploration where “central bank reserves are digital tokens that exist in the token arrangement with other types of money and securities … Above the settlement layer is the ‘asset layer,’ consisting of the wholesale money and securities issued … These tokens represented the reserves, commercial bank deposits, securities and unsecuritized assets that would be used in testing scenarios.”
Together, these projects underscore how public authorities aim to integrate tokenization into regulated infrastructures while private firms race ahead with commercial deployments.
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