Crypto: Tokenization makes finance more efficient, but creates risks according to the IMF

Tokenization is advancing at high speed in global finance, driven by institutions… but doubt is setting in. In a recent report, the International Monetary Fund (IMF) makes a blunt observation: this innovation promises to make markets more fluid and improve transparency, while introducing new risks that are difficult to anticipate. Between acceleration of exchanges and potential weakening of financial balance, tokenization stands out as a major transformation whose consequences still remain largely uncertain.

A financial innovation with tangible benefits according to the IMF

The International Monetary Fund highlights the structuring potential of tokenization for financial markets. In its report, the institution indicates that this technology can “reduce friction and increase transparency in finance”while specifying that “the overall impact of tokenization on financial stability remains uncertain”.

It is based in particular on automated mechanisms which profoundly modify existing infrastructures, with a transformation of the processes of issue, negotiation and settlement of financial assets.

In detail, the IMF identifies several concrete contributions linked to tokenization:

• Reducing operational friction in financial transactions;
• Improving transparency through distributed ledgers;
• The use of atomic settlement, limiting certain counterparty risks;
• Automation of financial processes via smart contracts;
• The transformation of modes of issue, exchange and management of assets.

These advances are part of an already expanding market, with over $27.6 billion in real assets tokenized on-chainexcluding stablecoins. The prospects remain considerable, oscillating between 2,000 billion and 16,000 billion dollars by 2030 according to estimates, which confirms the growing interest of institutional players in this emerging infrastructure.

Systemic risks: monetary sovereignty and legal challenges

Beyond operational gains, the IMF emphasizes emerging vulnerabilities. The organization emphasizes that “episodes of tension in tokenized markets are likely to occur more quickly than in traditional systems”pointing to a risk of acceleration of financial crises. The speed and automation of tokenized infrastructures reduce the room for maneuver for human interventions in the event of a shock, profoundly changing crisis management.

The analysis also highlights macroeconomic issues. Tokenization could encourage more volatile capital flows, accelerate monetary substitution and weaken the sovereignty of central banks. Added to this are legal uncertainties. Without a clear framework on asset ownership and the purpose of settlements, the IMF believes that these markets could be “fragmented and marginal”. Technical solutions are emerging, such as the ERC-3643 standard, aimed at regulating access to tokenized assets and strengthening regulatory compliance.

Faced with these observations, two dynamics seem to confront each other. On the one hand, private and institutional players are accelerating the integration of tokenization into their infrastructures. On the other hand, the monetary authorities are calling for caution in the face of risks that are still poorly controlled. The future of tokenized finance will depend on the ability to reconcile technological innovation and systemic stability, within a regulatory framework that is still under construction.