IMF Says Tokenized Markets Are Growing Fast but Remain Small

The International Monetary Fund said tokenized financial markets are expanding quickly but remain small and fragmented, with legal uncertainty, regulatory gaps, weak interoperability and limited settlement assets restricting wider adoption.

Public tokenized real-world assets excluding repurchase agreements, stablecoins and private markets totaled about $65 billion as of July. Tokenized equities accounted for roughly $2.3 billion, while fixed-income assets represented about $48 billion, including $30.4 billion in credit products and about $17.5 billion in money-market funds.

The IMF said investors need confidence that a token represents an enforceable legal right. Regulators also need to clarify how existing rules apply to distributed ledgers and new market functions, while platforms must connect so liquidity does not remain trapped in isolated pools.

Repurchase agreements remain the largest area of tokenized-market activity. Their average daily volume was about $303 billion over the latest 30-day period covered, compared with roughly $13 trillion in daily U.S. repo-market volume.

The IMF examined five highly liquid tokenized U.S. equity products issued by Ondo Finance and xStocks and linked to the S&P 500, Nasdaq 100, Tesla, Google and NVIDIA. The sample covered 11 trading venues and 365 trading days, with reported market value of about $345 million.

More than half of the transactions occurred outside regular U.S. market hours, while about 80% involved less than one share. The report identified 24-hour access and fractional trading as important characteristics of current use, with small retail investors prominent in the sample.

Liquidity was weaker than in corresponding traditional markets. Realized volatility for the tokenized products was about 1.5 times higher, while decentralized exchanges showed the weakest liquidity in the sample. The IMF cautioned that the market remains at an early stage and that the findings should be interpreted carefully.

The fund warned that broader adoption could amplify familiar financial risks, including sell-offs, liquidity runs and contagion. Tokenized markets may reduce delays in messaging, trade execution, settlement and reconciliation, removing buffers that can support liquidity management.

Systemic risks remain limited for now, the IMF said, but will depend on whether market infrastructure, legal foundations, liquidity arrangements and risk controls keep pace with adoption. It recommended technology-neutral supervision, policy sandboxes, safe settlement assets, circuit breakers and liquidity safeguards.