IMF warns tokenized assets could introduce new financial stability risks

The International Monetary Fund (IMF), in a 23-page report, reported that the overall effect of blockchain-based tokenization on financial stability remains uncertain, even as $27.6 billion in tokenized real-world assets, excluding stablecoins, sit on public blockchains. “Atomic settlement and enhanced transparency reduce some traditional risks, but speed and automation introduce new ones,” the report states.

The paper notes that tokenization can streamline how securities and other financial products are issued, traded, settled and managed. At the same time, risk can migrate from banks and market utilities to shared ledgers and smart contracts. According to the IMF, stress events in tokenized markets are likely to unfold faster than in traditional systems, leaving less time for discretionary intervention.

The IMF pointed to potential gains in emerging markets, such as faster cross-border payments and broader access to financial services. It also flagged policy trade-offs, warning of volatile capital flows, rapid currency substitution and erosion of monetary sovereignty if tokenized real-world assets move across borders at scale without clear safeguards.

Legal uncertainty emerged as a key barrier. Without clear rules on ownership records and settlement finality, the IMF cautioned, tokenized markets could become fragmented and remain peripheral. Industry efforts to address compliance include permissioned token standards that control who can hold or trade an asset.

Data indicate more than $27.6 billion of tokenized real-world assets on-chain, excluding stablecoins. Long-term estimates differ: a 2022 analysis from Boston Consulting Group put the potential market at $16 trillion by 2030, while a 2024 outlook from McKinsey & Co. projected about $2 trillion over a similar period.

Large institutions are proceeding with pilots and products. BlackRock chief executive Larry Fink has promoted putting traditional assets such as stocks, bonds and money market funds on blockchains. Securitize, the platform behind the BlackRock USD Institutional Digital Liquidity Fund, accounted for about $3.38 billion in value as of April 1, with Tether Gold and Ondo Finance at roughly $3.35 billion and $3.21 billion, respectively.

Market operators are building infrastructure. Intercontinental Exchange, the parent of the New York Stock Exchange, announced in January a tokenization platform designed for 24/7 trading and near-instant post-trade settlement for stocks and exchange-traded funds.

Developers in the Ethereum ecosystem introduced the ERC-3643 token standard to meet regulatory and compliance needs by limiting tokens to approved investors and enabling identity checks. On March 20, Coinbase Asset Management issued tokenized shares of the Coinbase Bitcoin Yield Fund on the Base network, working with Apex Group to verify investor eligibility under ERC-3643.

The IMF assessed that benefits such as transparency and immediate settlement can reduce some counterparty and settlement risks, while concentration among technology providers, coding errors and automated liquidations could amplify shocks. The report concludes: “The net effect of tokenization on financial stability is uncertain.”