Tokenization represents interests in physical assets as digital tokens, which can open infrastructure to investors beyond the institutions that have traditionally held it. That raises the question: if an interest becomes easier to hold, how does an investor understand the underlying asset?
Institutions rely on engineers, consultants, and extensive due diligence to assess risk. Investors with smaller interests rarely have those resources. And tokenization doesn’t, on its own, show them what sits behind the token: the asset’s condition, its operating history, and the unresolved risks that may have built up over time. A token can tell you what you hold. It doesn’t necessarily tell you what you’re inheriting.
Borrowing an idea from batteries
Other industries have already started answering a version of that question. From February 2027, the EU will require a digital passport for many new batteries, including those in grid storage: a record of what each battery is made of and what happens to it, kept for its whole life. It covers the battery, not the project around it. If a battery needs a passport, why doesn’t the asset it sits in?
Growing up in Europe, I got used to rules for almost everything, but now and then one is worth borrowing as an idea, even where nobody requires it.
This is one of those times. Not because a regulator says so; nothing does. But anyone buying, financing, or holding an interest in an asset should know its risks before they commit.
An asset passport is a record of what an asset is and what has happened to it over its life: identity plus history. It tells you what the asset has been through, not whether it’s a good asset.
Why a data room isn’t enough
Having a data room doesn’t mean an asset’s history is easy to access. It means someone assembled a set of documents for one transaction.
That makes sense when an asset changes hands occasionally, and a buyer can justify weeks or months of due diligence. Tokenization starts from a different premise: making interests in an asset easier to hold and to transfer.
As interests change hands more often, rebuilding the asset’s history each time becomes harder to justify. The challenge shifts from preparing information for one transaction to preserving it across many and making it easily accessible.
Two farms that look the same
A token can make an asset easier to hold. What makes it investable is knowing its risks.
Suppose you’re choosing between two solar farms. On paper, they look the same: same capacity, same region, same kind of power purchase agreement. For a relatively small investment, you’re unlikely to read thousands of pages of reports and maintenance logs, let alone visit the sites.
Yet that’s where the differences are. One site’s main inverter may have failed repeatedly. A cable insulation problem may still be unresolved and dragging on output. One farm may be curtailed more often than the other, or have a warranty claim still open. None of that changes the token: who holds an interest, or what share of the asset it represents. All of it changes the risk the asset carries. A passport wouldn’t label any of that as risk. But a record showing the same equipment needing major work again and again tells you where to look.
A token may represent the same interest over time, but the asset behind it is constantly changing. Equipment ages, contracts expire, warranties run out, financing terms are renegotiated, and operational decisions accumulate. The interest may remain the same. The risk does not.
What a passport could change
For an investor thousands of miles from the asset, those changes are hard to see. That’s the gap an asset passport aims to narrow: a history that travels with the asset and grows as it changes, so the context doesn’t have to be rebuilt from a deal-specific data room every time. It isn’t meant to replace investor judgment or periodic reporting. A report tells you what the asset produced. It doesn’t tell you what the asset has been through. A passport is meant to give investors, however far they are from the asset, the context they need to exercise that judgment.
In practice, each new investor could spend less time asking what happened to the asset and more time evaluating what it means. Major interventions, equipment replacements and warranty status could be in the record. What has been learned about the asset could stay with the asset, instead of being rediscovered or lost each time it changes hands. And emerging risks could become visible as they develop, not only when a diligence process begins.
A passport doesn’t remove risk. But a risk you can see is one you can price.
Should you trust it?
Well, you shouldn’t trust it blindly.
An asset passport is valuable not because it guarantees the truth, but because it makes information easier to examine, check, and compare.
What would make it worth trusting comes down to two things: everyone sees the same record, and nobody can quietly change what’s already in it. The harder question is who keeps it, since no one owns an asset’s history across sales.
Why would an owner agree to this? Because buyers tend to discount what they can’t see. A clear, documented history can be worth more than silence. It won’t suit every owner: an asset with a difficult history loses the benefit of the doubt. That’s the argument of my first post, that the asset itself matters most. All of this is my assumption, not something I’ve measured.
Information that travels
In my last two posts, I looked at how an asset’s history gets lost and how it could be recorded as the work happens. This is where that history could go next.
Whether an asset is sold outright or opened to investors beyond the institutions that traditionally held it, the challenge is the same: information needs to travel as easily as ownership. A passport that describes the physical asset and evolves with it, surviving time and changes of owner, might be a good place to start.
This is still an idea I’m working through, and I’d rather shape it with people who’ve lived the problem.
If you’ve inherited an asset, what would you want in its passport?
Update, Oct 21: I’ve since built a small demo of this on a test network, with two fictional solar farms that look identical on paper and have very different histories: see the two asset passports. Exploratory, fictional data (recorded dates are simulated), not a product, not audited.
