# Tokenization Process The diagram provided below outlines the five phases of the tokenization process for Real World Assets (RWAs).

Asset Tokenization Process
Source: https://assets.kpmg.com/content/dam/kpmg/sg/pdf/2024/02/kpmg-sfa-the-asset-tokenization-c-suite-playbook.pdf

Here's an explanation of each phase: #### Phase 1: Deal Structuring This initial phase involves setting up the legal and operational framework necessary for tokenization: * **Issuer**: The entity that creates the tokens. * **Investment Manager**: Manages the investment strategy for the assets being tokenized. * **Administrator**: Handles administrative tasks and coordination. * **Auditor**: Ensures compliance with financial and legal standards. * **Custodian**: Safeguards the physical or digital assets underlying the tokens. * **Legal/Tax Advisors**: Provide guidance on compliance with legal and tax obligations. * **Structure into SPV (e.g., VCC or Trust)**: The assets are placed into a Special Purpose Vehicle, like a Variable Capital Company (VCC) or a trust, to separate them from the issuer's main business. * **Underlying Assets**: These are the actual assets (e.g., real estate) being tokenized. #### Phase 2: Digitization In this phase, the assets are converted into digital tokens on a blockchain platform: * **Tokenization Platform**: The technological platform where tokens are created. * **Programmable Actions (Smart Contracts)**: These are self-executing contracts with the terms of the agreement directly written into lines of code. * **Digital Register of Members on Blockchain**: A blockchain-based registry that records all token holders. #### Phase 3: Primary Market The tokens are initially offered and distributed to investors: * **Primary Distribution**: Tokens are sold to investors, typically through private sales or initial coin offerings (ICOs). * **Investment Tokens**: The actual digital tokens representing ownership or a claim on the underlying assets. #### Phase 4: Corporate Actions This phase involves the management and administration of the tokens post-issuance: * **Asset Servicing**: Includes the management of underlying assets, ensuring they are maintained and operated efficiently. * **Coupon Payments, Dividends, Principal**: Handling of financial distributions and repayments to token holders. #### Phase 5: Secondary Market Trading Tokens are traded among investors after the initial sale: * **Trading via OTC or Exchanges**: Tokens can be traded over-the-counter or on various cryptocurrency exchanges. * **Ownership Updates on Digital Register**: The blockchain register updates ownership information as tokens are traded. These phases represent a comprehensive framework for the tokenization of assets, ensuring that the process is compliant, transparent, and efficient from initial structuring through to trading on the secondary market. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://research.chainedassets.com/intro-to-rwa/rwa-introduction/tokenization-process.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.