New Delhi, Dec. 22 -- Asset tokenization has moved into the policy spotlight after lawmaker Raghav Chadha last week called for a dedicated law to govern it in India.

As global markets experiment with putting assets such as stocks, gold and real estate onto blockchains, Mint explains what asset tokenization is, how it works, and why regulators are beginning to pay closer attention to this emerging financial model.

Tokenization refers to the process of representing real-world assets in digital form on a blockchain. Simply put, it converts rights linked to a physical or financial asset into a blockchain-based token that can be stored, transferred or traded digitally. These tokens serve as on-chain records of the underlying asset and can be...