The SEC now distinguishes between wrapped and native tokenization. Native tokenization keeps assets directly onchain as the single source of truth, enabling real-time distributions, instant settlement, verifiable governance, and lower costs compared to wrapped tokens that require offchain reconciliation.
The SEC distinguishes between wrapped tokenization, where digital representations point to offchain custodian positions requiring dual ledgers, and native tokenization, where assets are issued directly onchain. Native tokenization offers significant advantages: direct custody without intermediaries, real-time yield distribution (demonstrated by Franklin Templeton's money market fund on Stellar), instant settlement enabling 24/7 trading with stablecoins, verifiable governance through smart contracts, and dramatically reduced costs enabling retail access. Franklin Templeton reduced per-transaction recordkeeping costs from $1 to under a penny on Stellar, lowering minimum investment to $20. Native tokenization represents a fundamental shift from holding a representation of an asset to holding the asset itself.
