Tokenization Glossary

A comprehensive guide to the terminology of digital securities and capital markets.

A

• Accredited Investor
  An investor who meets specific income, net worth, or professional qualification requirements established by securities regulators. Certain private offerings may only be available to accredited investors.
• Alternative Trading System (ATS)
  A regulated trading venue that facilitates the buying and selling of securities outside of traditional stock exchanges. Some digital securities trade on licensed ATS platforms.
• AML (Anti-Money Laundering)
  Policies, procedures, and technologies used to detect and prevent money laundering, fraud, terrorist financing, and other financial crimes.
• Asset Tokenization
  The process of representing ownership rights in a real-world asset as digital tokens on a blockchain.

B

• Blockchain
  A distributed digital ledger that records transactions across a decentralized network of computers, providing transparency, security, and immutability.
• Broker-Dealer
  A licensed financial firm authorized to buy and sell securities on behalf of clients or for its own account.

C

• Cap Table
  A capitalization table showing ownership interests within a company, including shareholders, investors, and equity allocations.
• Corporate Actions
  Events initiated by an issuer that affect investors, including dividend payments, stock splits, voting rights, mergers, and redemptions.
• Custodian
  A regulated financial institution responsible for safeguarding investor assets, including digital securities.

D

• Decentralized Ledger
  A database distributed across multiple computers rather than maintained by a single centralized authority.
• Digital Asset
  Any asset represented electronically using blockchain or distributed ledger technology.
• Digital Securities
  Securities issued and managed using blockchain technology while remaining subject to applicable securities laws.
• Dividend
  A distribution of profits paid to investors or shareholders.

E

• ERC-20
  A widely adopted Ethereum token standard designed primarily for fungible cryptocurrencies and utility tokens.
• ERC-3643
  An advanced Ethereum token standard designed specifically for regulated digital securities with built-in compliance features.
• ERC-1400
  A family of Ethereum standards developed for compliant security tokens, supporting transfer restrictions and investor verification.

F

• Fractional Ownership
  Ownership of a percentage of an asset rather than the entire asset.
• Fund Tokenization
  The process of issuing digital tokens representing ownership interests in an investment fund.

G

• Governance
  The rules and decision-making processes governing a company, blockchain protocol, or investment structure.

I

• Institutional Investor
  An organization investing large amounts of capital, including pension funds, insurance companies, endowments, hedge funds, and asset managers.
• Issuer
  The company or organization creating and offering securities or tokenized investment opportunities.

K

• KYC (Know Your Customer)
  Identity verification procedures used to confirm the identity of investors before allowing participation in financial transactions.

L

• Liquidity
  The ease with which an asset can be bought or sold without significantly affecting its market price.
• Lock-Up Period
  A period during which investors cannot sell or transfer their securities due to regulatory or contractual restrictions.

M

• Market Capitalization
  The total value of an asset, company, or tokenized offering based on outstanding ownership interests.
• Multi-Signature Wallet
  A digital wallet requiring multiple approvals before transactions can be executed.

N

• NAV (Net Asset Value)
  The value of an investment fund calculated by subtracting liabilities from total assets.

O

• Offering Memorandum
  A legal disclosure document describing an investment opportunity, associated risks, financial information, and offering terms.
• On-Chain
  Activities, records, or transactions that occur directly on a blockchain.
• Off-Chain
  Information or processes maintained outside a blockchain.

P

• Primary Market
  The market where securities are issued and sold directly by the issuer to investors.
• Private Placement
  A securities offering sold directly to a limited group of investors rather than through a public exchange.
• Private Equity
  Ownership investments made in privately held companies.
• Proof of Ownership
  Blockchain records demonstrating ownership of digital assets or tokenized securities.

Q

• Qualified Custodian
  A regulated financial institution authorized to safeguard client assets under applicable securities regulations.

R

• Real-World Asset (RWA)
  A tangible or traditional financial asset represented digitally on a blockchain, including real estate, private equity, commodities, infrastructure, private credit, and investment funds.
• Reg A+
  A U.S. securities exemption allowing companies to raise capital from both accredited and non-accredited investors, subject to SEC qualification.
• Reg CF
  Regulation Crowdfunding, allowing eligible companies to raise capital from retail investors through registered crowdfunding portals.
• Reg D
  A U.S. securities exemption commonly used for private offerings to accredited investors.
• Reg S
  A securities exemption allowing certain offerings to occur outside the United States.

S

• Secondary Market
  A marketplace where investors buy and sell securities after their initial issuance.
• Security Token
  A blockchain-based digital representation of a regulated security, providing investors with legally recognized ownership or financial rights.
• Smart Contract
  Self-executing software deployed on a blockchain that automatically performs actions when predefined conditions are met.
• Stablecoin
  A digital asset designed to maintain a relatively stable value by referencing a reserve asset such as a fiat currency.

T

• Token
  A digital representation of value or ownership recorded on a blockchain.
• Token Economics (Tokenomics)
  The economic design governing how a token is issued, distributed, managed, and used.
• Token Standard
  A technical specification defining how blockchain tokens operate and interact with wallets, smart contracts, and other applications.
• Tokenization
  The process of converting ownership rights in an asset into blockchain-based digital tokens.
• Transfer Agent
  An organization responsible for maintaining ownership records, processing transfers, and supporting corporate actions for securities.
• Transfer Restrictions
  Rules controlling when and how digital securities may be transferred between investors.

U

• Utility Token
  A digital token providing access to products, services, or network functionality rather than representing an ownership interest in an investment.

V

• Verification
  The process of confirming the identity, eligibility, or credentials of investors or issuers.
• Vesting
  A schedule determining when ownership rights become fully available to founders, employees, or investors.

W

• Wallet
  Software or hardware used to securely store, receive, and transfer blockchain-based digital assets.
• Whitelist
  A list of approved blockchain wallet addresses permitted to receive or transfer regulated digital securities.

Y

• Yield
  The income generated by an investment, typically expressed as an annual percentage.

Z

• Zero-Knowledge Proof (ZKP)
  A cryptographic method allowing one party to prove specific information is true without revealing the underlying information itself.