The tokenization of financial assets promises faster transactions and markets open 24 hours a day. Yet the sector still remains limited. In its latest report, the IMF highlights that volumes remain low compared to traditional markets and that platforms struggle to communicate with each other.
In brief
- Public tokenized assets represent approximately $65 billion, while repos reach $303 billion in average daily volume.
- More than half of tokenized stock trading takes place outside of U.S. market hours. About 80% of transactions involve less than one stock.
- The IMF calls for clarifying legal rules, harmonizing regulations and improving interoperability between traditional platforms and systems.
A still limited market
In theory, tokenization makes it possible to combine several stages of a financial transaction, from its validation to its settlement. This simplification attracts institutional investors, as shown by the major sector meetings this fall. However, the numbers show that the market remains far from mass adoption.
In its October report on financial stabilitythe IMF estimates that public tokenized assets, excluding pensions, represent around $65 billion. Tokenized stocks are worth only $2.3 billion, more than 70% of which is based on two platforms: Ondo Finance and Backed Finance.
However, pensions stand out with an average daily volume of $303 billion. This figure shows that collateral management is among the most concrete uses of tokenization. Despite this progression, activity remains concentrated in the United States and in a few offshore locations. In addition, the platforms still operate on networks that are not easily compatible.
Continuous, often fragmented exchanges
Tokenization already meets certain investor needs. More than half of tokenized stock trading takes place outside of U.S. market hours. This trend confirms the interest in continuously accessible markets. Furthermore, around 80% of transactions involve less than one share, which highlights the weight of small investors.
The platforms are developing fractional share offerings backed by crypto-assets. However, these markets remain less liquid and approximately 1.5 times more volatile than their traditional equivalents.
In addition, information published overnight is reflected in prices at the opening of traditional markets. The two universes therefore remain closely linked.
Immediacy also carries risks
Tokenization does not make financial risks disappear. On the contrary, it can accelerate their spread. By reducing settlement times, it leaves players less time to manage their liquidity and adjust their positions. In this context, the interconnection of registers and the use of debt can amplify tensions.
To support the development of the sector, the IMF identifies four priorities: legal certainty, regulatory clarity, interoperability and reliability of settlement assets. It also defends technologically neutral rules: the same activity must meet the same requirements, regardless of the system used.
Finally, the institution favors settlement in central bank currency and warns of the risks of contagion linked to private solutions, in particular stablecoins. In July, the IMF had already warned of the risks of monetary rushes linked to stablecoins.
Tokenization could therefore transform financial markets, but its growth will depend as much on the solidity of its infrastructures as on its ability to gain the trust of stakeholders. To follow its evolution, find all Tremplin.io articles dedicated to tokenization.
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