Tokenization, the representation of real assets on a blockchain, could reshape both crypto markets and traditional finance, while introducing new risks that regulators are not yet equipped to handle, according to the International Monetary Fund (IMF).
In a new report, the IMF described tokenization as more than a technical upgrade of the markets. By moving assets like money, bonds and funds to shared blockchains, transactions can be settled instantly, cutting out middlemen and reducing delays that define today’s markets.
The IMF says the “atomic settlement” that tokenization brings to the financial world could lower counterparty risk and force companies to manage liquidity in real time.
“Stress events are likely to unfold more quickly, leaving less time for discretionary intervention,” the report said. “Therefore, ensuring stability requires tokenized asset management to remain anchored in safe settlement assets, legally recognized finality and robust governance arrangements.”
The report points to stablecoins — tokens whose value is tied to a fiat currency — as a key bridge between crypto and traditional finance. These could become widespread settlement assets across tokenized platforms, the report said.
Yet their reliability depends on reserves and redemption systems, leaving them vulnerable to runs under stress.
The IMF also warned that faster, automated markets could amplify volatility, while smart contracts that trigger margin calls or liquidations could speed up sell-offs during downturns. Such rapid declines have been seen in crypto markets,
Tokenized assets can also move instantly across jurisdictions, complicating oversight and raising concerns about capital flight and currency substitution in emerging markets, the IMF wrote.
The organization called for clearer legal frameworks and stronger global coordination, arguing that without them, tokenized finance could deepen fragmentation rather than improve efficiency.
Tokenization has been a growing theme in the crypto sector. Real-world assets added to blockchain rails have already topped $23.2 billion, according to DeFiLlama data. With the exception of stablecoins, the majority of this number is in the form of tokenized gold or money market funds.
