Tokenization, the representation of real assets on a blockchain, could reshape both cryptocurrency 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 just a technical upgrade of markets. By moving assets such as money, bonds and funds onto shared blockchains, transactions can be settled instantly, eliminating middlemen and reducing the delays that define today’s markets.
The IMF says the “atomic settlement” tokenization brings to the financial world could reduce counterparty risk and force companies to manage liquidity in real time.
“Stressful events are likely to unfold more quickly, leaving less time for discretionary intervention,” the report said. “Therefore, ensuring stability requires that tokenized asset management remains anchored in secure settlement assets, legally recognized purpose and strong governance arrangements.”
The report highlights stablecoins – tokens whose value is tied to a fiat currency – as a key bridge between crypto and traditional finance. These could become widely used settlement assets on tokenized platforms, the report said.
However, their reliability depends on reserves and repayment systems, which exposes them to runs in the event of tensions.
The IMF also warned that faster, automated markets could amplify volatility, while smart contracts that trigger margin calls or liquidations could accelerate sales during downturns. Similar rapid declines have been seen in crypto markets,
Tokenized assets can also move instantly between jurisdictions, complicating monitoring 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, token finance could worsen fragmentation rather than improve efficiency.
Tokenization is a growing theme in the crypto industry. Real-world assets added to blockchain rails have already exceeded $23.2 billion according to DeFiLlama data. Excluding stablecoins, the majority of this figure is in the form of tokenized gold or money market funds.
