IMF identifies four risks in growth of tokenized finance

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IMF identifies four risks

Highlights

The IMF believes tokenization can improve market efficiency, but its ultimate effect on financial stability remains unclear.
The main risks are fragmented liquidity, faster crisis transmission, cross-border legal conflicts, and pressure on emerging economies through dollar stablecoins.
In the Fund’s view, the regulatory response should be built around interoperability, legal certainty, and the readiness of central banks to operate in a 24/7 environment.

In a new note prepared by IMF Financial Counselor and Director of the Monetary and Capital Markets Department Tobias Adrian, tokenization is described not as a local technological upgrade, but as a structural reshaping of how trust, settlement, and risk control function in finance.

Where the IMF sees the main risks

The first risk is fragmentation and a lack of interoperability. If tokenized platforms operate without common standards, liquidity may split across separate digital silos, while netting efficiency and asset convertibility at par could decline.

The second risk concerns financial stability: automated margin calls, continuous settlement, and algorithmic feedback loops reduce the time available for intervention during stress, which means shocks may spread faster than in traditional infrastructure.

The third risk the IMF identifies is in cross-border disputes. Tokenized transactions move across multiple jurisdictions and shared ledgers, while dispute resolution mechanisms remain mostly national.

The fourth risk concerns emerging markets and developing economies: dollar-denominated stablecoins may accelerate currency substitution, increase capital flow volatility, and weaken monetary sovereignty in countries with more fragile financial systems.

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The five steps proposed by the Fund

In response, the IMF proposes a five-part strategy. It includes anchoring settlement in safe money, applying a consistent regulatory approach to activities that are economically similar, ensuring legal certainty for tokenized assets, promoting interoperability standards, and adapting central bank liquidity tools to a 24/7 automated environment.

The Fund separately notes that the window for shaping the rules is still open, but will not remain open indefinitely.

What this changes for the market

The IMF warning comes at a time when tokenization is no longer a niche story. The onchain distributed asset value now stands at $26.71 billion, while the number of holders of such assets has reached 698,200. This confirms that the sector has already reached a scale at which infrastructure failures or regulatory mismatches could become a systemic rather than a local problem.

At the same time, estimates of the market’s future remain very broad. Boston Consulting Group in 2022 projected tokenization could reach $16 trillion by 2030, while McKinsey in 2024 offered a more conservative forecast of $2 trillion. That is why the current debate is no longer about whether tokenization will develop, but whether regulation will be able to keep pace with its growth.

We have previously highlighted that IMF warns tokenization could worsen sudden market crashes and trigger a “domino effect,” despite promises of faster and cheaper markets, ultimately forcing government intervention.

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