The vocabulary of asset tokenization draws from three distinct domains: securities law (the Howey Test, Regulation D, Qualified Custodian), blockchain technology (smart contracts, consensus mechanisms, Layer 2), and financial market structure (ATS, DvP, settlement finality). Fluency in all three is required to evaluate any specific tokenized product, issuing platform, or regulatory development.
This glossary provides institutional-grade definitions for 150 terms across all three domains, with specific attention to US regulatory context.
A
Accredited Investor — Under SEC Rule 501 of Regulation D, an individual with annual income exceeding $200,000 (or $300,000 joint with spouse), net worth exceeding $1 million excluding primary residence, or specified professional certifications (Series 7, 65, or 82 license). Most tokenized private funds are available only to accredited investors.
AML (Anti-Money Laundering) — Legal and regulatory obligations requiring financial institutions to detect, prevent, and report money laundering activities. In digital asset markets, AML compliance requires monitoring wallet address activity, screening against sanctions lists, and filing Suspicious Activity Reports with FinCEN.
Alternative Trading System (ATS) — An SEC-regulated marketplace for trading securities that is not registered as a national securities exchange. Most US digital security secondary markets operate as ATSs under Regulation ATS. Securitize Markets, tZERO, and INX are all SEC-registered ATSs.
Atomic Settlement — A transaction structure in which the exchange of asset and payment occurs simultaneously in a single blockchain transaction — both legs execute or neither does. Atomic settlement eliminates counterparty settlement risk (the risk that one party delivers while the other defaults before the other leg settles).
Asset-Referenced Token (ART) — Under the EU’s MiCA regulation, a digital token that maintains a stable value by referencing multiple currencies, commodities, or other assets. The EU equivalent of what US markets call a “basket stablecoin.”
B
Basis Points (bps) — One hundredth of one percent (0.01%). Used to express yield differences, management fees, and spread measurements in fixed income and fund management contexts. One hundred basis points equals one percentage point.
Blockchain — A distributed ledger technology in which transaction records are grouped into blocks, cryptographically linked to form an immutable chain, and replicated across a network of computers (nodes). No single party controls the ledger. Used as the foundational infrastructure for tokenized asset records.
BUIDL — BlackRock USD Institutional Digital Liquidity Fund. Launched March 2024 on Ethereum, BUIDL is the world’s largest tokenized Treasury fund, administrated by Securitize. It grew to $2.5+ billion in approximately 18 months and is the benchmark institutional tokenized cash product in the US market.
Broker-Dealer — Under the Securities Exchange Act of 1934, an entity that effects transactions in securities on behalf of customers (broker) or for its own account (dealer). Digital securities trading on ATSs typically involves broker-dealer intermediaries who have executed customer agreements.
Byzantine Fault Tolerance (BFT) — A property of distributed systems that allows the system to continue operating correctly even if some number of participants behave arbitrarily (including maliciously). Most blockchain consensus mechanisms are designed to achieve Byzantine fault tolerance up to a specified percentage of malicious actors.
C
Canton Network — A blockchain network developed by Digital Asset (using the DAML smart contract language) designed for institutional financial applications. Uses privacy-preserving architecture where participants see only transactions to which they are party. Members include Goldman Sachs, BNP Paribas, Broadridge, and 30+ other institutions.
CFTC (Commodity Futures Trading Commission) — The US federal agency that regulates commodity futures, swaps, and certain derivatives markets. The CFTC asserts jurisdiction over digital asset derivatives and has classified Bitcoin as a commodity. The SEC/CFTC jurisdictional boundary for digital assets remains a contested legal question resolved in part by FIT21.
Chainalysis — A leading blockchain analytics company that provides on-chain transaction monitoring, wallet screening, and AML compliance tools. Used by exchanges, custodians, and financial institutions to screen digital asset transactions against known illicit actors and satisfy AML/KYC obligations.
Cold Storage — A method of storing digital asset private keys on hardware devices that are never connected to the internet, maximizing security by eliminating remote attack vectors. Used by custodians for the majority of client assets. Contrast with “hot wallet.”
Collateral Token — A digital token used as collateral in a lending or derivatives transaction. Tokenized Treasuries (BUIDL, OUSG) are increasingly used as collateral in both on-chain DeFi protocols and traditional finance repo and derivatives markets.
Compliance Token (Permissioned Token) — A token whose smart contract embeds regulatory compliance requirements, automatically enforcing transfer restrictions based on investor accreditation, jurisdiction, lock-up periods, and other regulatory conditions. ERC-1400 and ERC-3643 are leading compliance token standards.
Commodity Exchange Act (CEA) — The primary US federal law governing commodity futures and derivatives trading, administered by the CFTC. Under the CEA, the CFTC has authority over spot digital asset markets involving commodities (including Bitcoin) and all digital asset derivatives.
Custodian — An entity that holds and safeguards financial assets on behalf of another party. For investment advisers subject to the Investment Advisers Act, client assets must be held with a “Qualified Custodian.” In digital asset markets, custodians hold private keys or employ equivalent key management infrastructure.
D
DAO (Decentralized Autonomous Organization) — An organization whose governance rules are encoded in smart contracts on a blockchain, with decisions made by token holders through on-chain voting rather than traditional corporate governance structures. Wyoming’s DAO LLC statute provides legal entity status for DAOs as limited liability companies.
DAO LLC — A legal entity structure specific to Wyoming that allows a decentralized autonomous organization to register as an LLC, providing members with limited liability protection. The Wyoming DAO LLC Act (2021) was the first US state law to recognize DAO-based governance as a valid LLC management structure.
DAML (Digital Asset Modeling Language) — A smart contract language developed by Digital Asset that is specifically designed for financial applications, with built-in support for multi-party authorization, privacy controls, and auditability. Powers the Canton Network and Broadridge’s distributed ledger repo platform.
DeFi (Decentralized Finance) — Financial services and products built on public blockchain networks using smart contracts, without reliance on traditional financial intermediaries (banks, brokers, exchanges). DeFi protocols enable lending, borrowing, trading, and yield generation in a permissionless, programmable format.
Digital Security — A financial security represented as a token on a blockchain. Subject to the same regulatory requirements as traditional securities (registration or exemption from registration under the Securities Act of 1933; trading on registered exchanges or ATSs under the Exchange Act). Also called “security token.”
Distributed Ledger Technology (DLT) — A broader category of record-keeping technology that distributes transaction records across multiple nodes without a central administrator. Blockchain is the most prominent form of DLT. Banks and financial infrastructure providers often use “DLT” to refer to permissioned or private network implementations.
DvP (Delivery versus Payment) — A securities settlement principle requiring that the transfer of the security and the transfer of payment occur simultaneously, eliminating the risk that one party delivers while the other defaults. Smart contract-based atomic settlement achieves DvP natively on public blockchains.
E
ERC-20 — The standard interface for fungible tokens on Ethereum. Defines a common set of functions (transfer, approve, allowance) that allow Ethereum tokens to be interoperable across wallets, exchanges, and protocols. Most liquid cryptocurrencies and early digital securities used ERC-20, though security tokens require additional compliance layers.
ERC-1400 — A security token standard for Ethereum that extends ERC-20 with additional functionality for compliance: transfer restrictions (allowing/blocking specific addresses), document attachment (linking offering documents to the token), forced transfers (regulatory compliance), and issuance/redemption controls. Developed by Polymath.
ERC-3643 — Also known as T-REX (Token for Regulated EXchanges), an Ethereum token standard that embeds identity and compliance requirements directly in the token contract using on-chain identity registries. Widely adopted in European institutional tokenization projects; growing adoption in US markets.
Ethereum — The leading public blockchain network for smart contract execution and tokenized asset deployment. Proof-of-stake consensus since The Merge (September 2022). Home to the deepest DeFi ecosystem, the most institutional tokenized assets by value, and the largest developer ecosystem of any smart contract platform. BlackRock’s BUIDL fund was deployed on Ethereum.
Evergreen Subnet — Avalanche’s institutional blockchain-as-a-service product, allowing financial institutions to deploy custom Avalanche subnets with institutional validator sets, compliance controls, and regulatory customization. Used by T. Rowe Price, WisdomTree, and Wellington Management in tokenization pilots.
F
Figure Technologies — A fintech company founded by Mike Cagney (SoFi co-founder) that built Provenance Blockchain specifically for financial applications. Figure has processed over $7 billion in loans and securities on Provenance and has tokenized mortgage-backed securities, fund interests, and repo agreements on the platform.
FinCEN (Financial Crimes Enforcement Network) — A bureau of the US Department of the Treasury that collects and analyzes financial transaction data to combat money laundering, terrorism financing, and other financial crimes. Digital asset businesses classified as Money Services Businesses (MSBs) are required to register with FinCEN and comply with BSA requirements including SAR filing and AML programs.
FINRA (Financial Industry Regulatory Authority) — A self-regulatory organization that oversees US broker-dealers and their registered representatives. FINRA membership is required for broker-dealers facilitating digital securities transactions, and FINRA rules govern customer communications, suitability, and supervisory obligations for digital securities sales.
FIT21 (Financial Innovation and Technology for the 21st Century Act) — Legislation passed by the US House of Representatives in May 2024 that establishes a framework for SEC/CFTC jurisdictional boundaries for digital assets and provides a pathway for digital assets to transition from security to commodity classification as their networks achieve sufficient decentralization.
FOBXX (Franklin OnChain US Government Money Fund) — The first tokenized money market fund registered under Investment Company Act Rule 2a-7, launched by Franklin Templeton on the Stellar blockchain in 2021 and subsequently expanded to Polygon. Minimum investment as low as $20 makes it the most accessible tokenized Treasury product.
Fractional Ownership — The division of an asset into smaller, purchasable units enabled by tokenization. A $50 million commercial property tokenized into 50 million tokens at $1 each allows investors to own fractions of the property proportional to their token holdings. Fractional ownership reduces minimum investment thresholds and improves portfolio diversification access.
Fungible — Assets are fungible when each unit is identical and interchangeable with any other unit (e.g., one dollar bill is identical in value to any other dollar bill; one share of a company is equivalent to any other share of the same class). Most tokenized securities are fungible (ERC-20 compatible). Non-fungible tokens (NFTs) represent unique, non-interchangeable assets.
G
Gas Fee — The transaction fee paid to Ethereum validators for executing a smart contract operation or processing a transaction on the Ethereum network. Gas fees are denominated in ETH and fluctuate based on network congestion. High gas fees on Ethereum’s base layer have driven adoption of Layer 2 solutions (Polygon, Arbitrum) for frequent, lower-value transactions.
GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act) — Legislation under consideration in the US Senate in 2025–2026 that would establish a federal framework for payment stablecoin issuers, clarifying licensing requirements, reserve standards, and supervisory authority. Passed through Senate Banking Committee in early 2025.
Governance Token — A token that grants holders voting rights in a decentralized protocol’s governance decisions — fee parameters, protocol upgrades, treasury allocations, or other operational decisions. Governance token holders are the de facto stakeholders of decentralized protocols. Many governance tokens have been classified as securities by the SEC due to profit-sharing mechanisms.
H
Hardware Security Module (HSM) — A physical computing device that manages and stores digital keys, performs encryption and decryption operations, and provides physical tamper-evidence. Bank custodians and institutional crypto custody providers use HSMs as a layer of key management security above software-based key storage.
Howey Test — The legal standard established by the US Supreme Court in SEC v. W.J. Howey Co. (1946) for determining whether a financial instrument constitutes a “security” subject to federal securities law. An instrument is a security (specifically an “investment contract”) if it involves (1) an investment of money (2) in a common enterprise (3) with an expectation of profits (4) derived primarily from the efforts of others. The Howey Test has been applied broadly to digital token offerings.
Hyperledger Besu — An open-source Ethereum-compatible client designed for enterprise and private blockchain deployments. Developed by ConsenSys, contributed to the Linux Foundation’s Hyperledger project. Used by JPMorgan’s Onyx and several European bank consortia for permissioned blockchain applications.
I
Institutional Investor — In SEC terminology, sophisticated market participants that include registered investment companies, banks, insurance companies, broker-dealers, investment advisers with $110 million+ in AUM, and other large entities. Many exemptions from securities regulation (Reg D, Rule 144A) are structured around institutional investor access rather than accredited individual investors.
Investment Company Act of 1940 — The primary US federal law governing mutual funds, ETFs, closed-end funds, and other pooled investment vehicles. Most tokenized investment funds must either register under the Investment Company Act or qualify for an exemption (Reg D funds, Section 3(c)(1) or 3(c)(7) funds). FOBXX is the first money market fund registered under Rule 2a-7 of the Investment Company Act that uses blockchain as its official record.
INX — INX Limited, the first company to complete an SEC-registered digital token IPO, raising $83 million in 2021. INX operates as a FINRA-registered broker-dealer, SEC-registered ATS, and regulated exchange for both security tokens and cryptocurrencies.
J
JPM Coin — A digital dollar issued by JPMorgan on its proprietary Onyx blockchain (built on Hyperledger Besu), used for intraday settlement of dollar-denominated transactions between institutional clients. Processes over $1 billion per day in institutional settlement. Rebranded as “Kinexys Digital Payments” in 2024.
JPMorgan Onyx — JPMorgan’s blockchain and digital assets business unit. Onyx operates JPM Coin, the Tokenized Collateral Network (for on-chain collateral management among institutional clients), and Project Guardian participation. Onyx represents the largest bank investment in proprietary digital asset infrastructure in the US.
K
KYC (Know Your Customer) — The process of verifying the identity of customers or investors, typically through government ID verification, liveness checks, and sanctions screening. Required for all regulated financial institutions under FinCEN’s Customer Due Diligence Rule and applicable to digital asset custodians, ATS operators, and broker-dealers.
Kinexys Digital Payments — The 2024 rebrand of JPM Coin, JPMorgan’s institutional blockchain payment system. Kinexys processes cross-border payments, intraday liquidity, and institutional FX transactions for JPMorgan clients on a permissioned blockchain.
L
Layer 2 (L2) — Blockchain scaling solutions built on top of a base blockchain (Layer 1) that process transactions off the main chain and periodically settle batches to the base chain. Layer 2 solutions dramatically reduce transaction costs and increase throughput while inheriting the security of the underlying Layer 1. Polygon, Arbitrum, Optimism, and Base are leading Ethereum Layer 2 solutions.
Liquidity Pool — A smart contract that holds reserves of two or more tokens, allowing traders to exchange tokens against the pool’s reserves rather than waiting for a matching counterparty order. Liquidity pools power decentralized exchanges (Uniswap, Curve) and are the foundational mechanism of most DeFi trading infrastructure.
Lock-Up Period — The period after a security’s issuance during which the holder cannot sell or transfer the security. Under Rule 144, securities issued under Regulation D are subject to a 12-month holding period before resale. Lock-up periods are enforced in tokenized securities through smart contract transfer restrictions.
M
Market Maker — A firm or individual that continuously provides buy and sell quotes for a security, providing liquidity to the market. Market makers profit from the bid-ask spread. In digital securities markets, the absence of professional market makers on most ATSs is a primary cause of limited secondary market liquidity.
MiCA (Markets in Crypto-Assets Regulation) — The European Union’s comprehensive digital asset regulatory framework, fully effective 2024. MiCA covers crypto-asset service providers (CASPs), asset-referenced tokens, and e-money tokens. It provides a passporting mechanism across all 27 EU member states. MiCA does not cover security tokens (those remain governed by MiFID II).
Money Market Fund (MMF) — A type of open-end investment fund regulated under Rule 2a-7 of the Investment Company Act, investing in short-term, high-quality debt instruments and maintaining a stable $1 net asset value. The US money market fund industry held approximately $6.8 trillion in early 2026. FOBXX is the first blockchain-based money market fund registered under Rule 2a-7.
MPC (Multi-Party Computation) — A cryptographic technique that allows multiple parties to jointly compute a function over their inputs while keeping those inputs private. In digital asset custody, MPC splits private key computation across multiple servers so that no single server ever holds the complete key, eliminating single-point-of-compromise risk while maintaining operational efficiency.
N
NFT (Non-Fungible Token) — A unique digital token that represents ownership of a specific, non-interchangeable asset. Unlike ERC-20 fungible tokens, NFTs (typically ERC-721 or ERC-1155 standard) cannot be directly substituted for one another. Used for digital art, collectibles, and increasingly for representing unique real-world assets (specific real estate parcels, luxury goods, intellectual property rights).
Node — A computer that participates in a blockchain network by maintaining a copy of the blockchain and validating or relaying transactions. Full nodes verify all transactions and blocks; light nodes verify only block headers. The number and distribution of nodes is a measure of a blockchain’s decentralization.
O
OCC (Office of the Comptroller of the Currency) — The primary regulator of national banks and federal savings associations in the United States. The OCC has been active in digital asset regulation — issuing guidance on banks engaging in crypto-asset activities, allowing banks to custody crypto assets, and granting the first national bank charter to a crypto-native company (Anchorage Digital, 2021).
OFAC (Office of Foreign Assets Control) — A division of the US Department of the Treasury that administers and enforces economic and trade sanctions. Digital asset businesses are required to screen wallet addresses against OFAC’s Specially Designated Nationals (SDN) list. OFAC sanctioned Tornado Cash (a crypto privacy protocol) in 2022, establishing that smart contract addresses can be sanctioned.
On-Chain — Actions, records, or assets that exist on a blockchain network, visible to all network participants and verifiable against the blockchain’s consensus state. On-chain data is immutable and transparent. Contrast with “off-chain” (data or transactions that occur outside the blockchain).
Oracle — A mechanism for bringing external data (prices, interest rates, asset valuations, real-world events) into a blockchain smart contract. Smart contracts can only access on-chain data natively; oracles bridge the gap between on-chain logic and off-chain information. Chainlink is the leading oracle network. Oracles introduce potential manipulation risk in DeFi applications.
Ondo Finance — A US-based asset management company that tokenizes access to institutional-grade fixed income products. Ondo’s OUSG (US Government Bond Fund) and USDY (US Dollar Yield) products are among the most widely integrated tokenized Treasury products in DeFi protocols.
P
Permissioned Blockchain — A blockchain network where participation (as a validator, transaction submitter, or data reader) requires authorization. Permissioned blockchains sacrifice decentralization for control, privacy, and compliance — appropriate for institutional applications where all participants are known, regulated entities. Hyperledger Besu, Canton, and Corda are leading permissioned blockchain platforms.
Private Key — A cryptographic value that authorizes transactions from a blockchain address. The private key is functionally equivalent to a password that controls the assets held at the corresponding public address. Whoever controls the private key controls the assets. Loss of the private key means permanent, irrecoverable loss of access to the assets. Custody infrastructure is fundamentally about private key management.
Programmatic Compliance — The embedding of regulatory compliance requirements (transfer restrictions, investor eligibility checks, lock-up periods, jurisdictional limits) directly into a token’s smart contract code, so that compliance rules are automatically enforced without human intervention at the point of transfer. ERC-1400 and ERC-3643 are the leading programmatic compliance token standards.
Project Guardian — The Monetary Authority of Singapore’s (MAS) flagship institutional tokenization initiative, involving 24+ global financial institutions (HSBC, JPMorgan, Deutsche Bank, BNP Paribas, DBS) in cross-border tokenized asset and settlement pilots. The most sophisticated central-bank-led tokenization pilot program in the world.
Provenance Blockchain — A public blockchain built by Figure Technologies specifically for financial asset applications. Provenance has processed over $7 billion in loans, participations, and securities on-chain. Its validator network includes regulated financial institutions. The HASH token provides gas for network operations.
Q
Qualified Custodian — Under the Investment Advisers Act, a custodian with which registered investment advisers must maintain client funds and securities. Qualified custodians include federally insured banks, savings associations, registered broker-dealers, and futures commission merchants. Several crypto-native firms have achieved Qualified Custodian status through trust company charters (Coinbase Custody, BitGo, Anchorage Digital).
Qualified Purchaser — Under the Investment Company Act, an individual with $5 million+ in investments, a company with $25 million+ in investments, or a trust with $5 million+ in investments managed by a “knowledgeable employee.” Section 3(c)(7) funds (including many large private equity funds) can accept an unlimited number of qualified purchasers without registering under the Investment Company Act.
R
RWA (Real World Asset) — A physical or traditional financial asset that has been tokenized and represented on a blockchain. RWAs include tokenized US Treasuries, real estate, private credit, commodities, and private equity fund interests. The total on-chain RWA market exceeded $18 billion in early 2026, with US Treasuries representing the largest single asset class.
Reg A+ (Regulation A+) — An SEC exemption from full registration that allows issuers to raise up to $75 million (Tier 2) per year from both accredited and non-accredited investors, subject to SEC review of offering documents and ongoing reporting requirements. Used for retail-accessible digital security offerings, including INX’s 2021 token IPO.
Reg D (Regulation D) — An SEC exemption from full registration under the Securities Act of 1933. Rule 506(b) allows sales to up to 35 non-accredited sophisticated investors without general solicitation; Rule 506(c) allows unlimited raises from accredited investors with general solicitation but requires issuer verification of accreditation status. The dominant exemption for institutional tokenized product launches.
Reg S (Regulation S) — An SEC exemption for securities offerings made exclusively to non-US persons in offshore transactions. Frequently combined with Reg D for global token offerings, with the US tranche under Reg D and the international tranche under Reg S.
Repo (Repurchase Agreement) — A short-term borrowing mechanism in which one party sells securities to another with an agreement to repurchase them at a higher price (reflecting the interest rate) on a specified future date. Broadridge’s DLR (Distributed Ledger Repo) platform processed a record $384 billion in intraday repo on a single day in 2024, the largest on-chain financial transaction in history.
S
SAB 121 (Staff Accounting Bulletin 121) — An SEC accounting guidance issued March 2022 that required public companies holding crypto assets on behalf of customers to record those assets as liabilities. The punishing capital treatment effectively prevented major bank custodians from offering digital asset custody. Reversed by the SEC in January 2025.
SEC (Securities and Exchange Commission) — The primary US federal regulator of securities markets, publicly traded companies, and investment advisers. The SEC asserts jurisdiction over digital assets that qualify as securities under the Howey Test. The SEC/CFTC jurisdictional boundary for digital assets remains a key regulatory question for the tokenization market.
Security Token — A digital token that represents a financial security — equity, debt, fund interest, or revenue right — and is subject to federal securities law. Security tokens must be registered with the SEC or issued under a registration exemption (Reg D, Reg A+, Reg S). Also called “digital security.”
Securitize — The leading US platform for institutional digital securities issuance and secondary trading. SEC-registered as a transfer agent and ATS operator (Securitize Markets). Administers BlackRock’s BUIDL fund. Has tokenized funds from KKR, Apollo, Hamilton Lane, and Franklin Templeton. Received a $47 million strategic investment from BlackRock in 2024.
Settlement Finality — The point at which a transaction is irreversible and the transferred asset is definitively in the recipient’s possession. Blockchain settlement finality varies by consensus mechanism — Ethereum has probabilistic finality after multiple confirmations, while Avalanche and Stellar achieve near-instant deterministic finality.
Smart Contract — Self-executing code deployed on a blockchain that automatically enforces the terms of an agreement when specified conditions are met. Smart contracts enable programmable distributions, automated compliance enforcement, atomic settlement, and trustless execution of financial transactions without intermediaries.
Solana — A high-throughput proof-of-stake blockchain known for low fees and fast transaction speeds (50,000+ TPS theoretical capacity). Used by several tokenized payment and stablecoin applications but has seen limited institutional tokenization adoption relative to Ethereum, partially due to historical network instability and the FTX association (FTX was Solana’s largest institutional backer).
SPDI (Special Purpose Depository Institution) — A Wyoming-chartered banking entity designed for digital asset activities. SPDIs can receive deposits, maintain custody, and transmit money without holding a state money transmitter license. SPDIs must maintain 100% liquid asset reserves. Custodia Bank and Kraken Financial have pursued SPDI charters.
STO (Security Token Offering) — A fundraising event in which a company or project issues tokenized securities to investors under a registration exemption (typically Reg D or Reg A+). The STO is the digital-native equivalent of a private placement. STOs gained prominence in 2018-2019 as a regulated alternative to unregistered ICOs.
Stablecoin — A digital token designed to maintain a stable value relative to a reference asset (typically the US dollar). Fiat-backed stablecoins (USDC, USDT) maintain their peg by holding dollar reserves. Algorithmic stablecoins (now largely discredited after Terra/Luna’s 2022 collapse) attempted to maintain peg through algorithmic monetary policy. Payment stablecoins are the subject of the GENIUS Act.
T
T+0 / T+1 / T+2 — Settlement timing conventions. T+0 means same-day settlement; T+1 means settlement one business day after trade date; T+2 means two business days. US equity markets moved from T+2 to T+1 settlement in May 2024. Tokenized asset settlement achieves T+0 (near-instantaneous atomic settlement) for on-chain transactions.
Token — A digital unit of value recorded on a blockchain. Tokens can represent fungible assets (ERC-20), unique assets (ERC-721 NFT), or financial securities with embedded compliance rules (ERC-1400, ERC-3643). The term “token” is often used interchangeably with “digital asset,” though technically a token is a specific blockchain-based representation.
Tokenization — The process of creating a digital representation of a real-world or financial asset on a blockchain, allowing the asset to be transferred, fractional, programmable, and settled on the blockchain’s infrastructure. Tokenization applies to US Treasuries, real estate, private equity, private credit, commodities, and essentially any asset with defined ownership rights.
Transfer Agent — An entity registered with the SEC (under Section 17A of the Exchange Act) that maintains the official record of a company’s security holders, processes transfers of securities, and handles investor communications. In digital security markets, the transfer agent maintains the on-chain ownership record. Securitize and Vertalo are SEC-registered digital transfer agents.
Treasury Token — A token representing ownership in a fund or instrument backed by US Treasury securities. BUIDL (BlackRock), FOBXX (Franklin Templeton), OUSG (Ondo Finance), and USYC (Hashnote) are the leading US treasury tokens by AUM.
Travel Rule (FATF) — A Financial Action Task Force (FATF) recommendation, implemented in the US through FinCEN’s BSA rules, requiring virtual asset service providers (VASPs) to share originator and beneficiary information when transferring digital assets above specified thresholds ($3,000 for domestic, $1,000 for international). Compliance requires VASPs to have Travel Rule messaging infrastructure.
U
USDC — USD Coin, a US dollar-pegged stablecoin issued by Circle Internet Financial. USDC is backed 1:1 by cash and short-term Treasury bills, with monthly attestations from Grant Thornton. One of the two largest stablecoins by market cap (alongside USDT), USDC is the primary settlement currency for institutional digital asset transactions in the US market.
USDT (Tether) — The largest stablecoin by market cap, issued by Tether Limited. USDT maintains a dollar peg through reserves of cash, Treasury bills, and other instruments, though Tether’s reserve transparency has historically been less granular than USDC’s. Dominant in offshore and crypto-native trading volumes.
Utility Token — A token that provides access to a product or service on a blockchain network — functionally more akin to a software license or prepaid service credit than to a financial security. The SEC distinguishes utility tokens from security tokens based on whether the token’s value depends primarily on the issuer’s continued efforts (a Howey Test application). Pure utility tokens may avoid securities classification, but the distinction is frequently contested.
V
Validator — In proof-of-stake blockchain networks, participants who stake the network’s native token as collateral to earn the right to validate (verify and add) new transaction blocks. Validators earn rewards for honest behavior and lose staked collateral (“slashing”) for malicious or negligent behavior. Ethereum’s validator set numbers 800,000+ as of early 2026.
Vertalo — An SEC-registered transfer agent and digital cap table management platform specializing in mid-market tokenization. Provides blockchain-based ownership records, investor management, and token issuance for private companies and funds with blockchain-agnostic infrastructure.
W
Wallet — Software or hardware that stores the private keys necessary to control digital assets on a blockchain. Custodial wallets (managed by an exchange or custodian) hold keys on behalf of users. Self-custody wallets (MetaMask, Ledger) give users direct control of their keys. Institutional custody typically uses custodial wallet infrastructure with MPC or multi-sig key management.
Wyoming SPDI — See Special Purpose Depository Institution (SPDI). Wyoming enacted the SPDI charter framework in 2019, enabling crypto-native companies to obtain a state banking license without holding FDIC-insured deposits, providing a regulated legal structure for digital asset custody businesses.
Z
Zero-Knowledge Proof (ZKP) — A cryptographic method that allows one party to prove to another that they know a value (or that a statement is true) without revealing the underlying information. In digital asset and tokenization contexts, ZK proofs enable privacy-preserving KYC (proving investor accreditation without revealing identity), confidential transactions (proving a transaction is valid without revealing its details), and ZK-rollup Layer 2 scaling (proving batches of transactions are valid without publishing each transaction).
This glossary is updated quarterly. Terms reflect US regulatory context and market conventions as of February 2026. For legal definitions governing specific transactions, consult qualified securities counsel.