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IMF Warns $65B Tokenization Market Has a Catch
The International Monetary Fund (IMF) has warned that the $65 billion tokenization market, which promises to make financial transactions faster and cheaper, also carries a significant risk. The IMF's October 2026 Global Financial Stability Report, titled 'Scaling Tokenization: New Efficiencies, New Vulnerabilities,' highlights the potential for blockchain-based financial instruments to reshape traditional markets. The report, published in Chapter 3, found that tokenized real-world assets, excluding repurchase agreements and stablecoins, had reached approximately $65.1 billion by July 31. The IMF cautions that the elimination of traditional financial system delays, such as those in clearing, settlement, and compliance, could accelerate the next crisis. The report also notes that more than half of tokenized equity trading occurs outside regular U.S. market hours, and that roughly 80% of transactions involve less than one share, indicating significant demand for fractional ownership. However, the IMF warns that the use of programmable collateral, automated margin calls, and continuous trading could accelerate forced liquidations during market disruptions. The report identifies legal certainty, regulatory clarity, interoperability, and reliable settlement assets as key obstacles to broader adoption of tokenized markets, which remain fragmented, relatively illiquid, and vulnerable to operational disruptions. Despite the potential benefits, the IMF suggests that the faster Wall Street becomes, the less time it may have to react when something goes wrong, as tokenization's greatest commercial attraction, removing friction from financial transactions, could also eliminate mechanisms that help markets withstand financial shocks.