Key facts
- Tokenized equity markets are less liquid and more volatile than traditional markets, according to the IMF.
- Tokenized equities represent about $2.3 billion of the $65 billion in outstanding tokenized real-world assets as of July.
- Over half of tokenized equity trading occurs outside regular US market hours.
- Roughly 80% of tokenized equity trades involve less than one share.
- The IMF warned that increased interconnectedness and leverage in tokenized markets could amplify risks like fire sales and contagion.
- Systemic risks remain limited due to the small scale of current adoption.
The International Monetary Fund (IMF) has cautioned that while tokenization has the potential to enhance efficiency in financial markets, it also carries risks that could amplify existing financial stability concerns. In an analysis published Thursday, the global financial institution noted that tokenized markets are expanding but remain small relative to traditional markets, facing hurdles such as poor interoperability and a lack of widely accepted settlement assets.
Trading activity highlights the disparity between tokenization's potential and its current scale. Tokenized repurchase agreements (repos) lead tokenized trading, with daily transaction volumes averaging $300 billion to $350 billion, a fraction of the approximately $13 trillion traded daily in the broader US repo market. Beyond repos and stablecoins, outstanding tokenized assets are primarily concentrated in credit products and money market funds. As of July, tokenized real-world assets (RWAs) reached about $65 billion, a small portion of the global capital-market assets estimated at $300 trillion. Tokenized credit accounted for $30.4 billion, followed by money market funds at $17.5 billion, while tokenized equities represented approximately $2.3 billion.
Despite their limited scale, tokenized equities are attracting investors interested in 24/7 trading and fractional ownership. The IMF observed that over half of tokenized equity trading occurred outside standard US market hours, with about 80% of trades involving less than one share. The analysis also suggested that tokenized markets could offer useful price signals, as overnight price movements in tokenized equities were reflected in traditional stock prices shortly after market openings.
However, the IMF found tokenized equities to be significantly less liquid and approximately 1.5 times more volatile than their traditional counterparts. The institution warned that as tokenized markets grow, increased interconnectedness and leverage could amplify traditional financial risks, including fire sales, liquidity runs, and contagion. The IMF called for the establishment of clearer legal and regulatory frameworks, improved interoperability between tokenized and traditional financial systems, and safeguards against emerging vulnerabilities. Currently, systemic risks are considered limited due to the nascent stage of adoption.
This is not the first time the IMF has voiced concerns about tokenization. Previous warnings in November 2025 and April highlighted the potential for automated trading and smart contracts to increase market volatility and flash crashes, and how faster settlement could accelerate financial stress. A July analysis also pointed to systemic risks stemming from fragmented platforms and inadequate regulatory coordination.
European regulators share similar concerns. Last month, the European Securities and Markets Authority (ESMA) cautioned that the increasing links between crypto and traditional finance, including through tokenized equities, could heighten the risk of financial shocks spreading across markets. The IMF authors concluded that the future of tokenization will depend more on policies ensuring market depth, trust, and sound safeguards than on technological possibilities.