The International Monetary Fund reports tokenized real-world assets reach US$65 billion, warning of

International Monetary Fund: Asset tokenization has huge potential, but it is necessary to be vigilant against risks and strengthen supervision.

The International Monetary Fund (IMF) recently emphasized that the rapid growth of asset tokenization in global financial markets contains both Huge potential and significant risks. In its latest analysis report, it was pointed out that although blockchain-based tokenization technology can provide advantages such as faster settlement speed, support for share ownership and after-hours trading, compared with traditional financial markets, this field is still in a state of insufficient supervision.

Calls for stronger regulation and market connectivity

The IMF urges policymakers to introduce stricter regulatory measures and enhance connectivity between financial platforms to support the safe adoption of tokenized assets. The organization pointed out that weak regulatory oversight, legal uncertainty and limited interoperability are the main obstacles to widespread acceptance of tokenization.

The IMF stated that the effectiveness of tokenization in the financial sector depends on integrating blockchain technology into existing systems, while establishing a robust legal framework and ensuring investor rights. The IMF emphasized that while tokenized assets may play an increasingly important role in the future, such growth must be accompanied by coordinated efforts by regulators. The IMF specifically noted that in addition to excitement about blockchain technology, a clear legal framework and enhanced investor protection are crucial to mitigating financial stability risks in the context of the increasing popularity of tokenization.

Although the tokenized real-world asset (RWA) market is small, it has broad prospects

As of July, the tokenized real-world asset (RWA) market has reached US$65 billion, accounting for only a small portion of the US$300 trillion in total assets in global capital markets. Among them, the size of tokenized credit products is US$30.4 billion, tokenized money market funds are valued at US$17.5 billion, and tokenized stocks are US$2.3 billion.

Tokenized repo agreements (Repos) account for a large proportion of transactions in these markets, with daily transaction volumes ranging from US$300 billion to US$350 billion. In comparison, the average daily transaction volume in the U.S. repo market is approximately US$13 trillion, indicating that tokenization still has huge room for expansion. The IMF suggests that this growth will depend on whether blockchain can better integrate into the broader financial landscape.

Current trends also indicate that the influence of the Meme Token market and traditional tokenized products is increasing. Technical analysis shows that tracking price fluctuations and investor behavior is equally critical. In the memin space, an online trend can quickly translate into millions of dollars in trading activity. For example, data shows that a US$99 "Niu Lai" transaction quickly increased in value to approximately US$370,000, which reflects the speed and scale of market transactions. Platforms such as Fomo Appdata combine features such as token discovery, social features, investor ranking and transaction notification to promote an increasingly dynamic trading environment.

Advantages and risks of tokenized stocks

Tokenized stocks are attracting large numbers of investors thanks to their support for round-the-clock (24/7) trading and share ownership. The IMF observed that more than half of all tokenized stock transactions occur outside standard U.S. stock trading hours, and approximately 80% of transactions involve less than one share of the entire stock. This reflects investors 'strong demand for flexibility and accessibility to market participation.

It is worth noting that overnight price movements of tokenized stocks tend to be highly consistent with the price movements of underlying stocks after U.S. stocks open, reflecting the potential of instant price discovery. However, the IMF pointed out that compared to traditional stocks, tokenized stocks are less liquid and have price volatility about 1.5 times higher.

Higher realized volatility and limited liquidity may pose greater risk to investors, especially in fast-changing markets or thinly traded markets, highlighting the importance of effective risk management. Although the lack of liquidity in tokenized assets does not necessarily prevent trading, it increases vulnerability to sharp price fluctuations, making effective risk control particularly critical.

Financial stability concerns and regulatory developments

The IMF has warned that closer connections between tokenized markets and traditional financial markets may increase the risk of financial contagion in stressful situations. If not properly managed, factors such as forced liquidations, liquidity withdrawals and leveraged activities may amplify market shocks. Although accelerating settlement through blockchain can reduce some transaction risks, it may also shorten the time window for institutions to respond to market disruptions, thereby exacerbating unstable events.

Currently, given the relatively small size of the tokenization market, the IMF's assessment of systemic risks is limited. However, as adoption increases, these risks are expected to rise. In previous reports, both the IMF and the European Securities and Markets Authority (ESMA) have pointed out that as integration deepens, there may be increased volatility, tight liquidity and spillover effects on traditional markets.

Faced with these challenges, the U.S. Securities and Exchange Commission (SEC) has introduced a temporary innovation exemption to allow certain tokenized stocks to be traded on selected on-chain platforms, a sign that regulators are taking a prudent approach to the expanding field of tokenization. The IMF report reiterated that the future of tokenization depends not only on technological progress itself, but also on legal clarity, liquidity and investor protection.