The International Monetary Fund (IMF) said that tokenization, the representation of real-life assets on the blockchain, could reshape cryptocurrency markets and traditional finance while introducing new risks that regulators do not yet have the capacity to manage.
In a new report, the International Monetary Fund describes tokenization as more than just a technological upgrade for markets. By moving assets such as currencies, bonds, and funds onto a shared blockchain, transactions can be settled instantly, eliminating intermediaries and reducing delays in today’s markets.
The International Monetary Fund said that the “atomic settlement” that tokenization brings to the financial world can reduce counterparty risk and force companies to manage liquidity in real time.
“Stressful events are likely to occur more quickly, leaving less time for discretionary intervention,” the report reads. “Ensuring stability therefore requires that tokenized asset management remains underpinned by secure settlement assets, legally recognized finality and robust governance arrangements.”
The report states that stablecoins – tokens whose value is pegged to fiat currencies – are an important bridge between cryptocurrencies and traditional finance. These could become widely used settlement assets across tokenized platforms, the report said.
Still, their reliability depends on reserve and redemption systems, which puts them under pressure.
The IMF also warned that faster automated markets could amplify volatility, while smart contracts that trigger margin calls or liquidations could accelerate sell-offs during a downturn. The cryptocurrency market has seen such a rapid decline,
Tokenized assets can also move instantly across jurisdictions, complicating regulations and raising concerns about capital flight and currency substitution in emerging markets, the IMF wrote.
The group calls for clearer legal frameworks and stronger global coordination, arguing that without these frameworks, tokenized finance could deepen fragmentation rather than improve efficiency.
Tokenization has been a growing theme in the cryptocurrency space. According to DeFiLlama, more than $23.2 billion in real-world assets have been added to the blockchain orbit. Excluding stablecoins, most of which are in the form of tokenized gold or money market funds.