The International Monetary Fund has assessed the current state of tokenized finance in its October Global Financial Stability Report, finding that public tokenized real-world assets stood at roughly $65 billion as of July. The figure excludes repurchase agreements, stablecoins and private transactions. While the market has expanded, it remains a small fraction of the estimated $300 trillion in global capital-market assets and continues to face structural obstacles that limit scaling.

Fixed-income instruments account for the majority of the tokenized total. Credit products represented about $30.4 billion and money-market funds roughly $17.5 billion, together forming approximately $48 billion in fixed-income exposure. Tokenized equities lagged far behind at around $2.3 billion.

Repo Activity Dominates but Trails Traditional Markets

Repurchase agreements form the largest segment of tokenized trading. Average daily volume in tokenized repos ranged between $300 billion and $350 billion in recent measurements, with one 30-day average near $303 billion. By comparison, the conventional U.S. repo market processes about $13 trillion each day. Activity remains concentrated in the United States and a limited number of offshore centers, with trading platforms operating largely in isolation across incompatible networks.

The IMF examined five liquid tokenized equity products linked to the S&P 500, Nasdaq 100, Tesla, Google and NVIDIA. The sample, drawn from products issued by two platforms and tracked across 11 venues over 365 trading days, carried a combined market value near $345 million. More than half of the trades occurred outside regular U.S. market hours, and approximately 80 percent involved amounts smaller than one full share. These patterns indicate that continuous access and fractional ownership are the primary attractions for current participants, many of them retail investors.

Overnight price moves in the tokenized equities were absorbed into traditional opening prices shortly after markets opened, suggesting the two venues respond to similar information. At the same time, the tokenized products displayed thinner liquidity and realized volatility about 1.5 times higher than their conventional counterparts. Decentralized exchanges recorded the weakest liquidity among the venues studied.

Four Interlocking Barriers to Wider Adoption

The report identifies four mutually reinforcing constraints that prevent tokenized markets from expanding more rapidly. First, investors require clear legal certainty that tokens represent enforceable rights to the underlying assets. Second, regulators must provide consistent guidance on how existing rules apply to distributed ledgers and new market functions. Third, platforms need greater interoperability so that liquidity is not trapped in separate pools. Fourth, settlement requires safe, widely accepted forms of money.

The absence of a common settlement asset is singled out as a particular vulnerability. Settling tokenized securities in private deposit tokens or stablecoins rather than central-bank money would layer additional contagion and concentration risk onto the credit and liquidity exposures already carried by issuers. The IMF has previously noted that stablecoins can face rapid withdrawals when confidence erodes.

Stability Risks Rise with Scale

Tokenization can compress multi-step processes of messaging, clearing, settlement and servicing into a single ledger-based step. Yet the same compression removes traditional time buffers that have historically supported liquidity management and risk assessment. As markets become more interconnected and leverage increases, familiar risks—fire sales, liquidity runs and contagion—could transmit more quickly across platforms.

For the present, systemic risk remains contained because the overall size of tokenized activity is still modest. The IMF stresses that this assessment could change if adoption accelerates without corresponding improvements in legal foundations, market infrastructure and risk controls.

Recommendations include technology-neutral supervision that treats similar activities consistently regardless of the underlying technology, the use of regulatory sandboxes, the promotion of safe settlement assets, circuit breakers and liquidity buffers. Authorities are also urged to monitor evolving vulnerabilities tied to interconnectedness, leverage and instantaneous liquidity demands so that safeguards keep pace with market growth.

European regulators have expressed parallel concerns. The European Securities and Markets Authority recently cautioned that expanding links between crypto assets and traditional markets, including through tokenized equities, could facilitate the cross-sector transmission of financial shocks.

Issuance and trading remain heavily concentrated, and network isolation continues to fragment liquidity. Until legal clarity, interoperability and reliable settlement arrangements improve, the efficiency gains promised by tokenization are likely to remain only partially realized.