IMF Warns Tokenized Markets Could Amplify Financial Risks

The International Monetary Fund says tokenized financial markets remain small but are growing, and warns that greater links with traditional finance could amplify financial risks if adoption expands without stronger safeguards. In an analysis published this week, the IMF described potential benefits including faster settlement, fractional ownership and trading beyond regular market hours. It also identified legal uncertainty, weak connections between platforms and limited availability of widely accepted settlement assets as obstacles to wider use. The IMF estimates that tokenized real-world assets had about $65 billion outstanding as of July, compared with roughly $300 trillion in global capital-market assets. Tokenized repurchase agreements, or repos, account for much of the activity: their daily transactions average about $300 billion to $350 billion, against roughly $13 trillion in the broader U.S. repo market. Tokenized equities have drawn interest for enabling trading outside conventional hours and purchases of fractions of shares. The IMF says more than half of tokenized equity trading takes place outside regular U.S.