The International Monetary Fund warned on July 23 that tokenization is reshaping how financial markets settle trades, manage payments, and record ownership. But if global standards remain weak, the technology may fracture the financial system rather than strengthen it.
In a blog post, Tobias Adrian, the IMF’s financial counselor and director of the Monetary and Capital Markets Department, said tokenization moves assets and liabilities onto shared digital ledgers where execution, clearing, and settlement can happen simultaneously. That could eliminate delays in markets still relying on separate systems, manual checks, and post-trade reconciliation.
Faster settlement, new risk hotspots
Adrian pointed out that tokenization makes settlement faster and payments cheaper, but it also changes where risk sits. Traditional markets use processing delays as buffers, giving banks, brokers, and supervisors time to react to errors or stress. In tokenized markets, smart contracts can transfer payments, collateral, and ownership within moments.
Automated margin calls, instant redemptions, and 24/7 settlement may trigger liquidity needs faster than firms can manage. Adrian warned that risk is shifting from bank balance sheets toward the platforms, code, and service providers that operate tokenized markets.
Major banks double down on tokenized rails
Despite the warning, large financial firms are pushing tokenization deeper into regulated finance. As crypto.news reported, major U.S. banks back a tokenized deposit network through The Clearing House, targeting a first-half 2027 launch. The system would allow 24/7 settlement of tokenized deposits while keeping deposits within the banking sector.
Tokenization is also spreading to securities. Securitize tokenized its NYSE-listed shares on Solana and Avalanche on its first public trading day. Ondo Finance brought BlackRock’s IVV ETF and Micron shares onto Ethereum, using a model that keeps the underlying securities in regulated U.S. custody.
Regulators wrestle with ownership, code oversight
The IMF stressed that tokenized finance needs clear rules on settlement assets, platform governance, interoperability, and central bank roles. Legal clarity is essential: investors must know whether tokenized records prove ownership, whether settlement is final, and which court has authority in cross-border disputes.
In the U.S., regulators are already reviewing tokenized securities. The SEC reportedly explored an innovation exemption for tokenized securities, allowing certain blockchain products to trade under tailored rules. The agency later delayed the proposal after exchanges raised concerns about shareholder rights and ownership verification.
The IMF’s analysis adds a global policy layer to that debate. Faster settlement could improve markets, but weak standards may split liquidity across competing platforms. If tokenized assets move across borders in real time, supervisors will have less time to respond during stress.
Adrian said central banks, regulators, and market operators must decide how tokenized finance should use public and private money, how platforms should connect, and how critical smart contracts should be supervised. Without common rules, tokenization may remain fragmented rather than evolve into a safer settlement model for global finance.