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The IMF dropped its October financial stability report, and the verdict on tokenized finance is pretty much what skeptics expected — big potential, messy reality.
Why It Matters
The IMF's identification of an interoperability gap in tokenized finance underscores a significant hurdle for the sector's growth and integration within the broader financial ecosystem. As the market grapples with concentration and low trading volumes, these barriers may hinder the adoption of tokenized assets by traditional investors and institutions. Addressing these challenges is crucial for unlocking the full potential of tokenized finance and realizing its promise as a transformative force in global markets.
The fund puts the total value of public tokenized assets at roughly $65 billion, excluding pension-related instruments. That number sounds large until you put it next to traditional markets. Volume is thin. Platforms don’t talk to each other. And the whole thing is basically concentrated in a handful of spots geographically and structurally.
Not a ringing endorsement.
Tokenized Stocks: $2.3 Billion, Two Platforms, One Big Problem
Tokenized stocks sit at just $2.3 billion in total value. And more than 70% of that is sitting on two platforms — Ondo Finance and Backed Finance. That kind of concentration isn’t a quirk. It’s a structural warning sign. If either platform runs into trouble, a huge chunk of the tokenized equity market goes with it.
The geographic picture isn’t much better. Most activity is still rooted in the US and a limited number of offshore locations. The IMF’s report is clear that the lack of compatibility between different platforms is a major barrier — probably the biggest one right now. Investors and institutions can’t easily move assets across systems, which defeats a lot of the efficiency argument for tokenization in the first place.
Pension-related tokenized assets tell a very different story. Average daily volume there hits $303 billion. That’s not a typo. The gap between $2.3 billion in tokenized stocks and $303 billion in pension-related daily volume says a lot about where tokenization actually works versus where it’s still aspirational. Collateral management, it turns out, is a sweet spot.
Who’s Actually Trading and When
Here’s where things get interesting. More than half of all trades in tokenized stocks happen outside US market hours. That’s a real signal — investors want 24-hour access, and tokenized markets are giving them that when traditional exchanges can’t.
And the trade sizes are small. Around 80% of transactions involve less than one share. Fractional shares backed by crypto-assets are pulling in smaller retail investors who want exposure without the full ticket price. That’s a genuine use case. But it comes with a catch — these markets are more volatile and less liquid than conventional equity markets. So the investors taking the smallest positions are also taking on the most fragile market conditions. That’s a tension the IMF clearly isn’t comfortable glossing over.
Faster Settlement Doesn’t Mean Safer Markets
The IMF’s core warning is worth sitting with. Tokenization doesn’t eliminate financial risk. It speeds up how fast risk moves. Shorter settlement times shrink the window for liquidity management and position adjustments. When markets get stressed, that compressed timeline can make things worse faster.
The fund also flags leverage as a concern. If tokenized markets scale up with leverage baked in, the amplification of market tensions becomes a real systemic issue. Registry interconnection — basically, making sure different platforms can actually communicate — needs serious work before that scenario plays out badly.
The IMF’s priorities for the sector are straightforward: legal certainty, regulatory clarity, platform interoperability, and reliable settlement assets. It’s calling for technology-neutral regulation, which means similar financial activities should face the same rules regardless of whether they run on blockchain or legacy infrastructure. That’s a sensible position and one that regulators in several jurisdictions are still far from implementing.
On settlement specifically, the IMF wants central bank money involved. It’s wary of private solutions — and stablecoins in particular. The fund had already flagged stablecoin risks back in July, warning about the potential for significant bank runs if stablecoins become deeply embedded in settlement processes. The October report doubles down on that concern. Relying on private stablecoin infrastructure for settlement introduces contagion risk that central bank involvement would help contain.
That’s a position that puts the IMF at odds with parts of the crypto industry that see stablecoins as a natural settlement layer. The fund isn’t saying stablecoins can’t exist — it’s saying they shouldn’t be the backbone of critical financial infrastructure.
Institutional adoption of tokenized assets remains limited. Liquidity constraints and volatility keep larger players cautious, even when the efficiency gains from tokenization are theoretically attractive. The IMF’s report doesn’t sugarcoat that gap. The market is growing, but it’s growing unevenly, with real structural problems that enthusiasm alone won’t fix.
Ondo Finance and Backed Finance currently hold the dominant positions in tokenized equities, together controlling more than 70% of a $2.3 billion market.
Frequently Asked Questions
What is the current size of the tokenized finance market according to the IMF?
The IMF values public tokenized assets at approximately $65 billion, excluding pension-related instruments, as of its October report.
Why does the IMF warn against stablecoins in settlement processes?
The IMF says reliance on private stablecoin solutions for settlement raises contagion risks and increases the potential for significant bank runs, and it recommends central bank money be used instead.
