The International Monetary Fund said on Thursday that tokenized financial markets are growing fast but still face three major obstacles: weak liquidity, poor interoperability, and incomplete regulatory frameworks. The IMF said that as tokenized assets scale up and become more tightly linked with the traditional financial system, existing risks could be amplified, including fire sales, liquidity runs, and contagion.
Market size remains small against traditional finance
According to an IMF blog post, tokenized real-world assets, or RWAs, had about $65 billion in outstanding value as of July this year. That is less than 0.02% of the roughly $300 trillion in global capital market assets, even though the segment has been expanding quickly.
Within that total, tokenized credit accounted for $30.4 billion, money market funds for $17.5 billion, and tokenized equities for about $2.3 billion. The breakdown suggests tokenization is still concentrated in fixed-income products and short-duration instruments.
Tokenized repurchase agreements, or repos, were the largest segment by trading volume, with daily turnover of about $300 billion to $350 billion. Even so, compared with the roughly $13 trillion daily U.S. repo market, tokenized repos still made up only about 2.5% of the total.
Tokenized stocks offer round-the-clock access, but liquidity is thin
The IMF said the main appeal of tokenized equities lies in 24/7 trading and fractional-share ownership. More than half of tokenized stock trading takes place outside regular U.S. market hours, and about 80% of trades involve less than one share. In the IMF’s view, that shows tokenized products are meeting part of retail demand for more flexible access.
At the same time, the fund found that tokenized stocks are significantly less liquid than traditional markets. Realized volatility was about 1.5 times that of the corresponding underlying assets. In practical terms, the same asset traded on a tokenized platform tends to see larger price swings and more difficulty finding execution.
The IMF also pointed to one constructive signal. Overnight price moves in tokenized stocks were reflected relatively quickly in the prices of the underlying shares once traditional equity markets opened. That suggests tokenized venues may provide some price discovery outside normal trading hours, though the IMF said that depends on sufficient market depth. Without that depth, small trades could distort the signal.
Warnings have been building over the past year
This is not the IMF’s first caution on tokenization. In November last year, it warned that automated trading and interconnected smart contracts could intensify volatility and trigger flash crashes. In April this year, it said faster settlement could speed up the transmission of financial stress. In July, it highlighted platform fragmentation and weak regulatory coordination as sources of systemic risk.
European regulators have raised similar concerns. Last month, the European Securities and Markets Authority, or ESMA, warned that growing links between crypto markets and traditional finance, including through tokenized stocks, could increase the risk of shocks spreading across markets. ESMA had already required EU crypto firms in early October to delist non-compliant stablecoins within three months, with January 2027 set as the deadline.
Policy, not technology alone, will shape the outcome
The IMF concluded: 「Tokenization may still transform finance, but its future will depend on whether policy can ensure market depth, trust, and sound safeguards, rather than on technological possibility alone.」