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International Monetary Fund staff said on Thursday that the tokenized market is currently small in size, severely fragmented, relatively illiquid, and more volatile than traditional counterparts.
According to the IMF, the average daily transaction volume of tokenized repo agreements is approximately US$300 billion to US$350 billion, while the transaction volume of other tokenized assets increased by US$65 billion. This analysis is based on the content of "extended tokenization" in Chapter 3 of the IMF's Global Financial Stability Report October 2026.
Market Size and Current Situation
International Monetary Fund staff pointed out that although the tokenized financial market is growing rapidly, its scale is still small, the market is fragmented, and the volatility is higher than that of traditional markets. They warned that the expansion could exacerbate familiar financial risks.
This analysis originates from chapter 3 of the IMF's Global Financial Stability Report October 2026, entitled "Expanding tokenization: New Efficiencies and New Vulnerability."
IMF staff Gonzalo Fernandez Dionis, Caio Ferreira, Mindaugas Leika and Athanasios Vamvakidis wrote in a blog post: "Despite rapid growth, the tokenized market remains very small and fragmented."
The authors stated that most tokenization activity is concentrated on repurchase agreements, with average daily transaction volume of approximately $300 billion to $350 billion. Trading in other tokenized assets, including credit, money market funds and tokenized securities such as stocks, added an additional $65 billion in volume. Compared to traditional markets, these transaction volumes are negligible. Daily trading volume in the U.S. repo market is approximately US$13 trillion, while total assets held in global capital markets reach US$300 trillion.
Interest in round-the-clock trading and broken stock trading
The IMF has found that investors are beginning to value some key features of the tokenized market. More than half of all transactions occur outside traditional market trading hours, and about 80% of the tokenized stock transactions analyzed by the authors had less than one share.
Theblog post noted that gains from overnight tokenized stocks were reflected in traditional stock prices shortly after the opening, indicating that both markets responded in unison to similar information.
Despite this, the authors stated that as fragmentation across networks and venues further weakens liquidity, tokenized markets remain relatively illiquid and show higher volatility than traditional markets.
Extended tokenization may increase the risk of runs and sell-offs
The authors believe that increased scale may also increase the risk. They wrote that certain tokenization features "may create new channels to transmit and amplify traditional financial risks such as sell-offs, liquidity runs and contagion effects by increasing interconnectivity and leverage."
They pointed to four major constraints to growth: legal certainty, regulatory clarity, interoperability and the availability of settlement assets. They called for a technology-neutral approach and consistent regulation of similar activities regardless of the technology used.
Previously, the IMF has paid attention to the issue of tokenization many times and stated in July that tokenization "may reshape settlement and financial stability." In September, Michael Selig, chairman of the U.S. Commodity Futures Trading Commission, said regulators should prepare markets for "large-scale tokenization."
