Real-World Asset Tokenization: Digital Usufruct and Who Really Holds Title
The marketing around real-world asset tokenization promises democratization, inclusion, and frictionless ownership, but the legal frameworks tell a different story.
Strip away the sales pitch and the architecture in regulatory papers, institutional white papers, and platform terms points to a familiar legal structure: usufruct — use without ultimate possession.
The late Dr. Michael S. Coffman traced this term inside United Nations documents and explained its historical meaning with clarity.[1]
“By definition, usufructuary rights are the rights to use and enjoy the profits and advantages of something belonging to another, as long as the property is not damaged or altered in any way. Conceptually, it is similar to renting or leasing something within limits set by its true owner. The usufruct system of property use is derived from the Latin word ususfructus. Originally it defined Roman property interests between a master and his slave held under a usus fructus bond. The Romans expanded this concept to create an estate of uses in land rather than an estate of possession. Having seized lands belonging to conquered kingdoms, the Romans considered them public lands, and rented [ususfructus] them to Roman soldiers. Thus the emperor retained the estate [possession] in the lands, but gave the occupier an estate of uses.”
Read that definition again: title and ultimate control remain with the sovereign; the occupier gets the right to use and collect fruits so long as the sovereign allows.
That ancient structure maps directly onto how major tokenization platforms are being built today.
Institutional projects like BlackRock’s BUIDL fund exist on permissioned blockchains requiring identity checks, whitelist transfers, institutional custody, and smart contracts with freeze and forced-redemption powers controlled by administrators.[4]
Larry Fink described tokenization as “the next generation for markets, the next generation for securities,” and proclaimed “Every stock, every bond, every fund, every asset can be tokenized.”[2][3]
But a token holder typically holds a beneficial, yield-bearing interest, not legal title. That is usufruct in digital form: you reap yield, you do not hold possession.
Every major tokenization stack enforces identity verification, custodial holding of underlying assets, and on-chain controls like freezes and transfer restrictions implemented at the contract level.[5]
Programmability is the key difference and the enforcement mechanism.
Traditional deeds sit inert; programmable tokens can expire, enforce carbon limits, restrict transfers, or auto-liquidate based on coded rules — features regulators and ESG frameworks actively request.
The World Economic Forum with Accenture calls this programmability a core value proposition while admitting its paradox: automation brings efficiency and constraint together.[6]
Coffman’s usufruct phrase “as long as the property is not damaged or altered in any way” is now enforced by code rather than a magistrate.
Smart contracts embed compliance, behavioral parameters, and conditional transfers so occupancy is contingent on meeting rules set by whoever controls administrative keys.
When issuers can freeze, claw back, or change the parameters of an asset, what remains is a revocable license dressed as ownership; the estate of possession sits with the administrator.
The hierarchy is layered: tenants pay rent, token holders receive yield, institutional tokenizers hold title and control contracts, and regulatory sovereigns command the environment those institutions operate in.
Regulators have shown willingness to act against code itself — the OFAC designation of Tornado Cash and the subsequent Fifth Circuit ruling exposed both ambition and appetite for control over digital systems.[7]
Above regulators sits the Bank for International Settlements, a private company of central banks that sets binding bank rules through the Basel framework and builds the monetary plumbing for tokenized finance.
The BIS Innovation Hub’s projects envision cross-border tokenized payments, multi-CBDC platforms, and unified ledgers that could become the settlement layer for tokenized assets.[10]
BIS leadership has been explicit: central banks will “have absolute control on the rules and regulations that will determine the use of that expression of central bank liability. And also, we will have the technology to enforce that.”[11]
Practical deployments matter. Post-conflict reconstruction frameworks and smart-city plans already reference tokenized land administration and programmable benefit tokens as governance tools.
When sovereign authority clears title, issues yield-bearing tokens, assigns digital identities, and administers programmable benefits, the original ownership role is transformed into conditional occupancy and engineered yield flows.
The record, from Coffman’s findings through institutional product design and multilateral infrastructure planning, supports one conclusion: tokenization as practiced replicates a digital usufruct — use without possession — enforced by code, custody, and a stack of authority reaching up to the BIS.
ENDNOTES
[1] Michael S. Coffman, “Background to the Wildlands Project,” 2014.
[2] Larry Fink, remarks at New York Times DealBook Summit, November 2022.
[3] Larry Fink, “2025 Annual Chairman’s Letter to Investors.”
[4] BlackRock USD Institutional Digital Liquidity Fund (BUIDL), fund documentation, 2024.
[5] Securitize platform documentation, 2024.
[6] World Economic Forum and Accenture, “Asset Tokenization in Financial Markets: The Next Generation of Value Exchange,” May 2025.
[7] OFAC designation of Tornado Cash, August 8, 2022; Fifth Circuit decision, November 26, 2024.
[10] BIS Innovation Hub project documentation: Project Agorá, Project Mariana, Project Dunbar, and related reports.
[11] Agustín Carstens, remarks at IMF seminar “Cross-Border Payments — A Vision for the Future,” October 19, 2020.