Non-fungible tokens and tokenised real-world assets

Non-fungible tokens and tokenised real-world assets share token infrastructure but are not one legal, economic or regulatory category. An NFT is a distinguishable token record. A tokenised financial or physical asset is a claim or interest represented through token infrastructure. In either case, the token's legal effect depends on governing law, documentation, authoritative registers and the parties controlling issuance, custody and redemption.

Two branches, several layers

ERC-721 specifies a technical interface for non-fungible tokens. It does not establish copyright, authenticity, title, custody or value in the media or asset referenced by the token. Metadata can sit on-chain or elsewhere, and possession of a private key may transfer control of the token without transferring an enforceable off-chain right.

Tokenised real-world assets can represent securities, fund interests, deposits, bonds, property interests, receivables or commodity claims. The label is a market category, not a single legal form. A native digital asset uses the token platform as the authoritative issuance record. A mirror token points to an authoritative record elsewhere. Issuers, custodians, trustees, special-purpose vehicles, registrars or contractual counterparties may hold or administer the underlying asset.

Settlement must be traced by layer. Token delivery, cash payment, custody movement, registrar update and legal finality may occur in different systems. A smart contract can coordinate conditions without making every leg final or eliminating principal risk. The relevant questions are who can mint, burn, freeze, upgrade, transfer or redeem the token, and which record prevails after a conflict.

Risk, regulation and control

Public ledgers can make transactions observable, but visibility does not ensure attribution, beneficial-ownership identification, reversibility or enforcement. Issuers, contract administrators, custodians, transfer agents, marketplaces, wallet providers, stablecoin issuers and banks can recreate familiar control points. A public blockchain is therefore neither automatically resistant to sanctions nor automatically compliant with them.

The United States Treasury's 2024 NFT assessment identified fraud, scams, theft and possible money-laundering use. It also found limited evidence of terrorist finance, proliferation finance or sanctions evasion through NFTs at that date, and noted that most illicit finance by value still used fiat currency. This is a risk assessment, not proof that NFTs are a major illicit-finance channel. Official assessments in 2024 and 2025 likewise described financial-asset tokenisation as nascent.

Statecraft boundary

Token infrastructure becomes statecraft terrain when a public issuer, regulator, sanctions authority or documented state-linked actor uses a specific control point for a strategic purpose. A sovereign tokenised bond, a sanctioned-wallet action or a state-linked theft operation can warrant a case record. Ordinary digitisation, commercial issuance, compliance screening or market regulation does not. The generic technology remains context because public evidence does not establish state-directed use at scale.

See also

Tokenised deposits and distributed-ledger settlement · Issuer-controlled dollar stablecoins (USDT and USDC) · Cryptocurrency and stablecoin sanctions evasion · Blockchain analytics platforms (Chainalysis, Elliptic, TRM) · Bitcoin and permissionless cryptoasset networks · Chokepoint effect

Sources

1. United States Department of the Treasury, Illicit Finance Risk Assessment of Non-Fungible Tokens (2024).
2. Financial Stability Board, The Financial Stability Implications of Tokenisation (2024).
3. International Organization of Securities Commissions, Tokenization of Financial Assets: Final Report, FR/17/25 (2025).
4. Iñaki Aldasoro et al., Tokenisation of Government Bonds: Assessment and Roadmap, BIS Bulletin 107 (2025).
5. Bank for International Settlements, The Next-Generation Monetary and Financial System, Annual Economic Report 2025, chapter III.
6. Ethereum Improvement Proposals, EIP-721: Non-Fungible Token Standard.
7. Financial Action Task Force, Updated Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (2021).
8. United States Department of the Treasury, Office of Foreign Assets Control, Sanctions Compliance Guidance for the Virtual Currency Industry (2021).
9. Securities and Exchange Commission and FINRA, "Joint Staff Statement on Broker-Dealer Custody of Digital Asset Securities", 8 July 2019.
10. Matthieu Nadini et al., "Mapping the NFT Revolution: Market Trends, Trade Networks, and Visual Features", Scientific Reports 11 (2021): 20902.
11. European Union, Regulation (EU) 2023/1114 on Markets in Crypto-Assets.
12. United States Department of the Treasury, "Treasury Releases First-Ever Non-fungible Token Illicit Finance Risk Assessment", 29 May 2024.