Updated: August 7, 2025
Tokenization as unbundling opens the pathway to further securitization. The prospect of securitization raises a bundle of intriguing questions about the legal ownership, coordinated governance, and the economic cost distribution between the disconnected network of investors.
In the past post, I have discussed the idea of tokenization as unbundling of the economic value and its applicability to different market settings. However, unbundling does not provide the end-value of tokenization and illustrates only half of the proposition of the holistic digitalization of objects of value. In this post, I discuss the other half — recombination of value, or bundling — and its hypothetical consequences on market dynamics.
Once fractionalized into multiple tokens, the tokens representing the parts of the underlying asset can be bundled back into portfolios either by intermediaries that offer them to investors or individuals themselves. A good analogy for this process is bundles of credit claims issued by the credit institutions and traded between institutional investors. Although the appearance of such products has not been in the media yet, it would be a natural development given the intense integration of blockchain infrastructure into the financial industry (financialization of blockchain technology).
Nevertheless, this logical comparison leads to another related, but distinct definition — securitization.
Securitization offers a related yet distinct paradigm. It begins with bundling heterogeneous or illiquid assets into pooled instruments (e.g., mortgage-backed securities), then segments those pools into tranches based on risk and return profiles. The goal is to enhance liquidity, enable portfolio diversification, and match financial products to investor preferences. Unlike stocks, which reflect ownership and voting rights in a firm’s total future cash flow, securitized instruments isolate and sell claims to specific cash flow streams — typically passive, collateralized, and structured.
Tokenization can operate downstream of securitization. Once assets are pooled and tranched, these tranches can be tokenized to improve transparency, automate settlement, and enable fractional resale. This makes tokenization an infrastructure upgrade to the existing financial architecture of securitization.
Given their profit-seeking nature and expectation of returns derived from the efforts of others, tokenized assets often meet the criteria of investment contracts under the Howey Test in the United States. As such, they fall under securities regulation. Securitized instruments — especially those offered to public investors — are almost always considered securities. Globally, legal classification varies but increasingly converges on treating tokenized and securitized instruments as regulated financial products, especially where investor protection is at stake. Inevitably, we arrived to the holistic investment nature of all tokenized assets.
Taking the analysis a step further, tokenization not only disaggregates ownership, but also value — and potentially, human relationships. As tokens fragment traditional bundles of economic and social value (e.g., homeownership, community, trust), they may reshape relational dynamics into transactional ones. Instead of holistic relationships built around shared ownership or community, tokenized ecosystems may produce thinner, more instrumental forms of engagement: fractional value capture, rather than collective value co-creation.
This echoes concerns raised by Clemons and Weber (1997), who warn that electronic trading platforms may eliminate the subtle cues used in pricing and decision-making. Franks and Schaefer (1995) similarly note that such abstractions have reduced market-maker profitability by undermining traditional mechanisms of price discrimination and informed trading.
The idea of tokenization as asset unbundling creates multiple interesting streams for future research. The list below is just a couple of quite obvious logical questions and is not exhaustive.
The key envisioned benefit of tokenization is liquidity increase. However, there is a lack of empirical evidence of whether it is true for all asset classes, and what the characteristics of the asset classes are where it works and where it doesn't.
The challenges appear in how to assign the ownership rights of the tokenized assets. Therefore, additional evidence is needed on how different legal regimes across various jurisdictions affect the market liquidity and the willingness of investors to invest in such assets.
The distribution of token ownership of tokenized assets is another question. The collective ownership bears additional cost (adding the prohibitive cost of coordination in extreme cases), which creates barriers for entry for some actors. Therefore, the tokenization may be meaningless if the evidence shows the ownership concentration for certain asset classes.
Tokenization holds transformative potential, particularly when deployed to digitize and fractionalize real-world assets that are otherwise illiquid or inaccessible. Its promise lies in expanding participation, enhancing liquidity, and facilitating financial innovation. However, this promise rests on careful market design, robust governance, and legal clarity. As with all market innovations, context matters. Poorly implemented tokenization may fragment value without generating sustainable demand or utility. In its best cases, tokenization aligns with established economic strategies of unbundling and recombination. In its worst cases, it risks replicating the volatility and fragmentation of penny stocks — more performative than productive. The future of tokenized economies will depend on how thoughtfully we navigate these trade-offs.
Bloomfield, R., & O’Hara, M. (1999). Market Transparency: Who Wins and Who Loses? The Review of Financial Studies, 12(1), 5–35.
Clemons, E. K., & Weber, B. W. (1997). Information Technology and Screen-Based Securities Trading: Pricing the Stock and Pricing the Trade. Management Science, 43(12), 1693–1708.
Please cite this article as:
Petryk, M. (2025, August 7). Thoughts on Tokenization: Part 2. MariiaPetryk.com. https://www.mariiapetryk.com/blog/post-18