Key Takeaways:
Tokenization promises near-instant settlement but risks fragmentation without coordinated regulation, the IMF warned.
Tokenization could compress multi-day settlement into near-instant transactions and reshape global financial architecture, but fragmented standards and uncoordinated regulation risk creating new systemic dangers, the International Monetary Fund said July 2.
"Tokenization shifts risks away from traditional financial intermediaries and toward the underlying infrastructure, including smart contracts, distributed ledgers and service providers," Tobias Adrian, the IMF's financial counselor and director of its Monetary and Capital Markets Department, said in a blog post.
The warning comes as the tokenized real-world asset market has reached roughly $60 billion across more than 7,000 products and 12 asset classes, according to BeInCrypto research. Yet 56 percent of that value — $32.9 billion across 910 assets — showed zero weekly transfer activity. Just 62 assets hold 88 percent of total market value, with the top five products — Figure's HELOC product, Circle's USYC, Tether Gold, BlackRock's BUIDL fund and Justoken's JMWH — accounting for roughly half on their own.
Adrian said policymakers have a narrow window to determine how tokenized markets evolve, with decisions on settlement assets, governance, interoperability and the role of central banks determining whether tokenization makes the financial system more efficient or introduces new systemic risks.
Institutional Adoption Accelerates
Despite the concentration and dormancy issues, traditional financial institutions are moving rapidly toward tokenized infrastructure. The Clearing House, whose owners include JPMorgan Chase, Bank of America and Barclays, plans to launch a tokenized deposit network in early 2027, aiming to keep deposits within the regulated banking system while enabling faster, programmable payments.
In the United States, the Securities and Exchange Commission has taken steps to clarify how existing securities laws apply to tokenized assets and is considering an "innovation exemption" that could allow market participants to test blockchain-based trading platforms for tokenized securities while a longer-term regulatory framework is developed. PwC research found that tokenization could address longstanding inefficiencies in traditional finance, including payment settlement and the transfer of asset ownership. A May report from Moody's showed traditional financial institutions are actively preparing for a shift toward tokenized finance.
The Infrastructure Gap
David Taylor, co-founder and chief executive officer of EtherFuse, which tokenizes sovereign debt from Brazil and Mexico, said the bottleneck is not a shortage of assets but a shortage of access. "A $60 billion market that 97 percent of people can't touch, where half the assets never move, isn't a market yet. It's a waiting room," he said.
Chandler Fang, founder of t54, which builds trust and verification infrastructure for AI-driven finance, said tokenized assets remain siloed inside individual apps rather than embedded into the platforms investors already use. "If you look at a new asset class such as muni bonds, those assets are still tradable under traditional mainstream trading platforms," Fang said. "I think RWAs need to gradually get into our mainstream trading channels."
Andrew O'Neill, digital assets lead analyst at S&P Global Ratings, said the gap is as much a monitoring problem as a liquidity one. "Tokenized funds still carry familiar off-chain risks around fund management, asset quality, and redemption. What changes is the technology layer," he said. "These controls are important because tokenized assets only become useful at scale if participants can see how risk is measured and enforced."
Industry forecasts diverge sharply on how fast the gap closes. McKinsey projects $2 trillion in tokenized assets by 2030, excluding stablecoins. Boston Consulting Group estimates $600 billion to $1 trillion in tokenized fund assets under management by the same date. Standard Chartered's broader projection, including trade finance and bonds, reaches $30 trillion by 2034.
This article is for informational purposes only and does not constitute investment advice.
