IMF Warns Tokenization Growth May Amplify Financial Risks
The IMF says tokenized markets remain small but could deepen existing financial risks as legal and stability concerns slow adoption.
The International Monetary Fund has warned that growth in the tokenization market could amplify existing financial risks, according to Cointelegraph. Tokenization can improve trading and settlement efficiency, the IMF said, but legal uncertainty and financial stability concerns may hold back its spread.
The IMF pointed to weak interoperability between tokenized markets and the traditional financial system, and said a widely accepted settlement asset is still lacking.
Tokenized trading is concentrated in repurchase agreements (repos), with average daily volume of $300-350 billion, the IMF said. By comparison, the overall US repo market trades about $13 trillion a day.
As of July, tokenized real-world assets totaled about $65 billion, against roughly $300 trillion in global capital market assets. Within that $65 billion, tokenized credit products accounted for $30.4 billion, money market funds for $17.5 billion and tokenized securities for about $2.3 billion.
Tokenized securities also showed signs of fragility. More than half of their trading occurred outside regular US market hours, and about 80% of trades lasted less than a week. The IMF said these securities had significantly lower liquidity than existing stocks and realized volatility about 1.5 times higher.
The fund called for clearer legal and regulatory frameworks and stronger interoperability with the traditional financial system.
Quick answers
How large is the tokenized real-world asset market?
As of July, tokenized real-world assets totaled about $65 billion, compared with roughly $300 trillion in global capital market assets, according to the IMF.
What did the IMF say about tokenized securities trading?
More than half of tokenized securities trading occurred outside regular US market hours, about 80% of trades lasted less than a week, liquidity was significantly lower than existing stocks and realized volatility was about 1.5 times higher.
What is the IMF asking for?
The IMF called for clearer legal and regulatory frameworks and stronger interoperability with the traditional financial system.