Show Notes: One of the hottest buzzwords on Wall Street is "tokenization." While the term has long been used in the context of cryptocurrency, exchanges and companies are moving quickly to create digital stocks. On this episode, host Mike Townsend is joined by Jim Ferraioli, director of digital currencies research and strategy at the Schwab Center for Financial Research, for a timely discussion on the implications of tokenization for investors, exchanges, and companies. They discuss how regulators and Congress are moving quickly to make digital stock trading a reality in the United States, the potential cost savings for companies of tokenization, and how investors are driving demand for digital stocks that offer all investors the ability to trade 24 hours a day, seven days a week, and settle almost instantly. Jim offers his thoughts on how and why this evolving development using blockchain technology could impact the markets. Mike also provides updates on the latest developments in Washington, including the arrival of Kevin Warsh as the new chair of the Federal Reserve, the debate on Capitol Hill over a federal gas tax holiday, and the progress of a bipartisan housing reform bill in Congress.

WashingtonWise is an original podcast for investors from Charles Schwab. For more on the series, visit schwab.com/WashingtonWise.

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The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party.

This material is intended for general informational and educational purposes only. This should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned are not suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decisions.

All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions. Data contained herein from third party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

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Investing involves risk, including loss of principal.

All names and market data shown are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Diversification, asset allocation strategies do not ensure a profit and do not protect against losses in declining markets.

Money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in the fund.

Alternative investments cover a wide array of strategies, including real estate, private equity, private credit, and hedge funds. Risks will vary based on each unique strategy and can include investments in highly illiquid assets or securities, use of leverage, higher fees, lower transparency, tax risks, and limited ability to redeem or limited transferability.

Investing in cryptocurrencies involves risk, including the risk of total loss of principal invested. Cryptocurrencies [such as bitcoin and ethereum] are highly volatile, are not backed or guaranteed by the bank, any central bank or government; are not deposits; are not FDIC insured; are not SIPC protected; and lack many of the regulations and consumer protections that legal-tender currencies and regulated securities have.

Cryptocurrency-related products carry a substantial level of risk and are not suitable for all investors. Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment in the fund. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Some cryptocurrency-related products use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency, which may result in unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended.

Performance may be affected by risks associated with non-diversification, including investments in specific countries or sectors. Additional risks may also include, but are not limited to, investments in foreign securities, especially emerging markets, real estate investment trusts (REITs), fixed income, municipal securities including state specific municipal securities, small capitalization securities and commodities. Each individual investor should consider these risks carefully before investing in a particular security or strategy.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.

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