- The IMF warns tokenization could reshape markets but faces legal uncertainty and stability risks.
- Tokenized repos dominate with $300–$350 billion daily volume, far below the $13 trillion US repo market.
- Tokenized equities offer 24/7 trading and fractional ownership but show 1.5x higher volatility and lower liquidity.
- Regulatory and interoperability gaps must be addressed before tokenization can scale safely.
The International Monetary Fund warned Thursday that tokenization could transform financial markets through faster settlement but remains hindered by legal ambiguity and stability threats, according to a new analysis. Tokenized repurchase agreements dominate trading at $300 billion to $350 billion daily, compared with roughly $13 trillion in the broader US repo market.
Beyond repos, outstanding tokenized real-world assets reached about $65 billion as of July, a fraction of the $300 trillion global capital market. Tokenized credit accounted for $30.4 billion, money market funds $17.5 billion, and equities just $2.3 billion. Despite limited scale, tokenized equities attract investors seeking round-the-clock trading and fractional ownership, with over half of trades occurring outside US market hours and roughly 80% involving less than one share.
However, the IMF found tokenized equities are significantly less liquid and exhibit about 1.5 times the realized volatility of traditional counterparts. The agency warned that growing interconnectedness and leverage could amplify risks like fire sales and contagion as adoption expands. Clearer regulation, greater interoperability, and safeguards are needed to address emerging vulnerabilities.
The IMF has repeatedly raised tokenization concerns, cautioning in November 2025 that automated trading could amplify flash crashes. European regulators, including the European Securities and Markets Authority, have similarly warned that links between crypto and traditional finance might spread financial shocks. “Tokenization may yet transform finance, but its future will be determined less by technological possibilities than by policies that ensure market depth, trust, and sound safeguards,” the authors concluded.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
