Tokenization could make finance faster, but also more susceptible to shocks, IMF says
Jul 3, 2026, 9:06 a.m.
Tokenization, the process of moving financial assets into a blockchain environment, could make markets faster and cheaper. It could also make them more vulnerable to shocks, the International Monetary Fund (IMF) warned Thursday.
“Frictions disappear — but so do buffers,” Tobias Adrian, the IMF’s head of monetary and capital markets, wrote in a blog post.
Tokenization represents financial assets, such as stocks, bonds and bank deposits, on shared digital ledgers. Smart contracts execute trades, transfer ownership and process payments much faster than in traditional finance (TradFi), where it can take days.
In TradFi, a trade is executed, cleared, settled and reconciled, with each step handled by a different institution. A seller may not receive the proceeds and a buyer the shares for two days or more. For a tokenized asset, the process takes seconds.
“When a tokenized asset changes hands, smart contracts can execute trades, transfer ownership, and move payments simultaneously — all on a shared ledger. Processes that once required days of clearing and reconciliation are now completed in moments,” Adrian said.
There are other advantages too. Tokenization enables different forms of digital money, such as tokenized bank deposits, fiat-pegged stablecoins, and tokenized central bank reserves to function seamlessly as settlement assets on the same ledger.
It also allows high-quality assets to be quickly deployed across platforms as collateral.
But all this is not without risk.
The hidden danger
The delays that tokenization eliminates aren’t just inefficiencies, Adrian wrote. They also give banks, regulators and risk managers time to catch problems before they spread.
Remove this buffer, and a market shock, a coding error, or a sudden wave of automated selling could ripple through the system before anyone can intervene.
“Liquidity demands materialize in real time, collateral calls can be automated, and failures can propagate faster than institutions or supervisors can respond,” he wrote. “Risk [sic] that once were borne by the balance sheet of individual institutions behind a transaction become increasingly concentrated in the platforms and code that govern these transactions.”
Adrian also flagged concentration risk. Tokenization tends to funnel activity onto fewer, larger platforms. “When infrastructure becomes the central hub,” he warned, “governance failures become systemic events.”
On cybersecurity, he warned that consolidation onto shared ledgers “amplifies the importance of operational resilience, cybersecurity, and crisis management.”
Regulation hasn’t caught up
Perhaps the biggest concern is that the regulatory frameworks governing global finance were built for a slower world and are not keeping pace with the speed of tokenization.
“Market participants must know whether tokenized records constitute definitive ownership, whether settlement finality is legally recognized, and which jurisdiction’s law applies,” Adrian wrote. “Without clarity, tokenization will remain fragmented and peripheral.”
For emerging and developing economies in particular, cross-border flows raise the risk of “volatile capital movements, rapid currency substitution, and erosion of monetary sovereignty.”
Adrian singled out stablecoins as a structural weak point, comparing them to money market funds: functional in calm conditions but vulnerable to runs when confidence breaks down. Even fully backed stablecoins depend on issuers’ operational capacity to meet redemptions and on the liquidity of underlying government securities markets.
The report laid out three scenarios for how tokenized finance could evolve: a coordinated system anchored by wholesale central bank digital currencies, a fragmented patchwork of incompatible national platforms, or a world dominated by private stablecoins where public backstops weaken.
A five-pillar policy roadmap called for anchoring settlement in safe money, consistent regulation across equivalent activities, legal certainty for tokenized assets, interoperability standards, and adapting central bank tools for continuous-operation environments.
The IMF’s caution arrives as U.S. exchanges move aggressively. The NYSE tapped Securitize in March to build a 24/7 tokenized securities platform, while NYSE parent ICE invested in OKX at a $25 billion valuation to explore tokenized stock trading. Nasdaq filed with the SEC to trade tokenized shares on the same order book as traditional equities, and the DTCC received a no-action letter in December to tokenize certain custodied assets.
Tokenized real-world assets have reached roughly 5.5 billion at the start of 2025. Total stablecoin market capitalization sits near $300 billion.