The push to bring stocks and funds onto blockchain is gaining speed, but the International Monetary Fund (IMF) is urging caution. In a recent note, the IMF said that moving core market systems to tokenized platforms could make financial stress events move faster than regulators can handle.
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The warning comes as major players test the model. The New York Stock Exchange (NYSE) is building a platform for trading tokenized stocks and exchange-traded funds around the clock. Nasdaq (NDAQ) has also taken steps toward allowing tokenized trading on its venue. At the same time, firms like BlackRock Inc. (BLK) and JPMorgan Chase & Co. (JPM) are already running pilot programs.
Tokenization refers to turning assets like stocks or bonds into digital tokens that trade on shared ledgers. The idea is simple. Trades settle faster, costs drop, and markets stay open around the clock. However, the IMF says those same features could add new risks.
Faster Markets, Faster Stress
According to the IMF, speed is the key issue. Today, trades take time to settle, which gives regulators a window to act during periods of stress. In a tokenized system, trades settle almost instantly.
As Tobias Adrian of the IMF wrote, “Stress events are likely to unfold faster, leaving less time for discretionary intervention.” In other words, if markets drop quickly, there may be little time to step in before forced selling begins.
In addition, tokenized markets would run 24 hours a day. That creates another gap. Central bank tools were built for market hours, not for a system that never closes. This could make it harder to respond to sudden shocks that happen overnight or across time zones.
Stablecoins and System Design
Another concern is the role of stablecoins. These digital tokens are often used to settle trades in blockchain systems. The IMF compares them to money market funds. They work well in calm periods but can face runs when confidence drops.
At the same time, the IMF outlined three paths for the development of tokenized finance. One path involves strong coordination with central bank digital currencies. Other leads to a fragmented system across countries. A third path relies heavily on private stablecoins, which could weaken public safeguards.
Looking ahead, the shift toward tokenized markets is already underway. Exchanges, banks, and asset managers are investing in the technology. However, the IMF’s message is pretty blunt; while tokenization can improve efficiency, it also changes how risk moves through the system, and that may matter most when markets are under pressure.
We used TipRanks’ Comparison Tool to align notable companies that could benefit from a move into tokenization. In the list, you can find trading exchanges such as Intercontinental Exchange (ICE), Coinbase (COIN), and BlackRock.
