IMF warns tokenised markets carry volatility and liquidity risks
The IMF says tokenised equities trade at roughly 1.5 times the volatility of traditional stocks and remain far smaller than mainstream markets, urging clearer rules as adoption grows.
Why it matters: The IMF's findings signal that tokenised equities, despite their small size, could transmit volatility and liquidity stress into traditional markets as adoption grows.
Key points
- Tokenised real-world assets reached about $65bn in outstanding value as of July, against roughly $300tn in global capital-market assets.
- Tokenised repos average $300bn to $350bn in daily volume, versus about $13tn a day in the wider US repo market.
- More than half of tokenised equity trading happens outside regular US market hours, and about 80% of trades are for less than one share.
Tokenised markets could amplify financial risks as they grow, the International Monetary Fund has warned in a Thursday analysis. The IMF said tokenised financial markets are expanding quickly but stay small next to traditional markets, held back by poor interoperability and the absence of widely accepted settlement assets.
Trading activity shows the gap. Tokenised repurchase agreements dominate, averaging $300bn to $350bn in daily volume against roughly $13tn a day in the broader US repo market. Outstanding tokenised real-world assets reached about $65bn as of July, a fraction of the roughly $300tn in global capital-market assets. Tokenised credit accounted for $30.4bn, money market funds $17.5bn and tokenised equities about $2.3bn.
Tokenised equities still draw investors wanting round-the-clock trading and fractional ownership. Overnight price moves in tokenised equities appeared in traditional stock prices shortly after markets opened.
However, the IMF said tokenised equities were significantly less liquid and showed roughly 1.5 times the realised volatility of their traditional counterparts. It warned that greater interconnectedness and leverage could amplify fire sales, liquidity runs and contagion, and called for clearer legal frameworks, better interoperability and safeguards. Systemic risks remain limited for now because adoption is small. The IMF has raised tokenisation concerns before, including in November 2025, and ESMA warned last month about crypto-traditional finance links.
What to watch: The IMF calls for clearer legal and regulatory frameworks, greater interoperability and safeguards as tokenised market adoption expands.
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