IMF Highlights Risks and Potential of Tokenized Financial Markets
- Tokenized financial markets have a daily trading volume of $300 billion to $350 billion in repos, compared to $13 trillion in the traditional US repo market.
- As of July, tokenized real-world assets (RWAs) reached approximately $65 billion, a fraction of the estimated $300 trillion in global capital-market assets.
- Tokenized equities account for about $2.3 billion, with over half of trading occurring outside regular US market hours.
- The IMF noted that tokenized equities are less liquid and exhibit about 1.5 times the volatility of traditional equities.
- Concerns were raised regarding potential financial risks as interconnectedness grows between tokenized and traditional finance systems.
The IMF emphasizes that while tokenization could enhance efficiency in financial markets, challenges such as legal uncertainty and interoperability hinder broader adoption. Regulatory frameworks and safeguards are deemed necessary to mitigate emerging risks as adoption increases.
Currently, systemic risks remain limited due to the relatively small scale of tokenization, which includes around $65 billion in RWAs compared to traditional asset markets.(Source)
