IMF: Tokenized Market Size Grows Rapidly, but Interoperability and Regulation Remain Major Bottlenecks

October 8: According to an article published by the International Monetary Fund (IMF) on October 8, tokenization is expected to bring faster transactions, lower costs, broader market access, and financial markets that operate around the clock, but the relevant market size remains small and highly fragmented. The IMF believes that whether tokenization can truly unlock its potential depends on legal and regulatory clarity, interoperability between different platforms, safe settlement assets, and financial stability safeguards.

IMF data shows that tokenization activity is currently mainly concentrated in the repurchase agreement (Repo) market, with daily trading volume of about $300 billion to $350 billion; other tokenized assets such as credit, money market funds, and equities have additional daily trading volume of about $65 billion. By comparison, the traditional U.S. Repo market has daily trading volume of about $13 trillion, and global capital market assets total about $300 trillion, meaning the tokenized market is still only a very small part of it.

The IMF pointed out that issuance of tokenized assets is mainly concentrated in the United States and a few major offshore jurisdictions, while trading is dispersed across different platforms, blockchain networks, and settlement systems. The main factors currently limiting further development of the tokenized market include: investors need clarity on the legal rights represented by tokenized assets; regulators need clarity on how existing rules apply to new ledgers and market functions; different platforms need to achieve interoperability rather than forming isolated liquidity pools; and settlement needs to rely on a safe and widely accepted form of money.

From the perspective of market usage, tokenization has also demonstrated some features that traditional financial markets do not have. The IMF said that more than half of tokenized asset transactions occur outside traditional market trading hours, indicating market demand for around-the-clock trading; in the tokenized stock transactions it analyzed, about 80% of trades were smaller than one share, showing that fractional ownership has already been widely used.

However, the IMF also noted that the tokenized market still suffers from insufficient liquidity and relatively high volatility. Fragmentation across multiple networks and trading venues, as well as the lack of unified interoperability mechanisms and settlement assets, limits price discovery and liquidity formation. The IMF also warned that as the tokenized market expands, its efficiency gains may also come with new financial stability risks, including concentrated sell-offs, liquidity runs, and risk contagion arising from increased market interconnectedness and leverage. Although the current step-by-step trading, delayed settlement, and reconciliation processes in traditional financial markets increase costs and friction, they also provide a certain degree of risk buffering, liquidity management, and safety mechanisms.

The IMF believes that countries should adopt a technology-neutral regulatory approach, clarify the legal rights of tokenized assets, and ensure that the same economic activities are subject to consistent regulation regardless of the technology used, while also promoting interoperability between tokenized platforms and the traditional financial system. As the market expands, regulators also need to continuously monitor emerging risks such as interconnectedness, leverage, and liquidity.