The Rise of Tokenization: Deciphering New Trends in Payments and Asset Tokenization

Tokenization is an area of growing interest in financial services. At its core, it involves issuing assets, recording ownership, and transacting on a blockchain. While simple in concept, its implications for market structure, risk management, inclusion, and public policy are complex. Amid rapid technological change and experimentation, policymakers need to distinguish durable trends from temporary developments. This paper identifies emerging issues most relevant for policy, without prescribing specific choices. It is organized around a three-layer framework: infrastructure, assets, and services. The infrastructure layer covers the rails and rules for settlement; the asset layer includes tokenized money and financial assets such as stablecoins, deposits, CBDCs, securities, and money market funds; and the services layer includes wallets, exchanges, and related applications. This Note focuses on infrastructure and asset-layer developments, while noting how services are evolving in response.