IMF says tokenization could reshape financial markets, warns of new risks
The International Monetary Fund (IMF) says tokenization could change how financial markets work by making payments, settlements and recordkeeping faster and more efficient, while warning that fragmented rules and technology standards could create new risks.
In a blog post published Thursday, Tobias Adrian, the IMF’s financial counselor and director of its Monetary and Capital Markets Department, said tokenization has moved beyond a niche crypto use case and is becoming part of the broader financial system.
According to Adrian, putting assets, settlement and recordkeeping on shared blockchain-based ledgers could reduce settlement times from several days to nearly instant transactions, improving market efficiency and lowering costs.
However, he said tokenization also changes where risks exist in the financial system. Instead of relying mainly on banks and other financial intermediaries, markets would increasingly depend on smart contracts, blockchain networks and other technology providers. Without common standards and coordinated regulation, tokenized markets could become fragmented across incompatible platforms, creating new systemic risks.
The IMF’s comments come as financial institutions step up efforts to bring tokenized assets into traditional finance. The Clearing House, whose owners include JPMorgan Chase, Bank of America and Barclays, is reportedly planning to launch a tokenized deposit network in early 2027 to support faster, programmable payments while keeping deposits within the regulated banking system.
The IMF’s assessment echoes recent reports from PwC, which said tokenization could improve payment settlement and asset transfers, and Moody’s, which found that traditional financial institutions are actively preparing for wider adoption of tokenized finance.
Regulators face key decisions
The IMF said regulators now have a critical role in shaping how tokenized finance develops. Adrian argued that decisions on settlement assets, governance, interoperability and the role of central banks will determine whether tokenization delivers a more efficient financial system or creates new sources of systemic risk.
In the United States, the Securities and Exchange Commission has focused on explaining how existing securities laws apply to tokenized assets instead of creating a separate regulatory framework. The agency has also indicated it is considering an ”innovation exemption” that would allow companies to test blockchain-based trading platforms for tokenized securities while broader rules are being developed.
Featured image from: cointelegraph.com