IMF flags tokenised finance faultlines

Tokenisation of financial assets could pull some of the crypto market’s most destabilising traits into mainstream finance, the International Monetary Fund has warned, saying the same technology that promises faster settlement and lower costs may also magnify volatility, fragment liquidity and leave regulators with less time to respond in a crisis. The IMF set out the warning in an April note by Tobias Adrian, its financial counsellor, which described tokenised finance as a structural shift in market plumbing rather than a simple digital upgrade.

The report said tokenisation can improve efficiency by representing money and financial assets on programmable digital ledgers, allowing so-called atomic settlement, in which assets and payments move simultaneously. That can reduce counterparty risk, cut collateral needs and improve transparency. Yet the IMF argued that those gains come with new vulnerabilities because programmable markets can move at machine speed, smart contracts can trigger automatic asset sales, and activity can scatter across platforms with different rules, liquidity pools and technical standards.

A central concern is that tokenised markets may behave more like parts of crypto than traditional capital markets during periods of stress. The IMF said automation could intensify price swings, while round-the-clock trading may compress the window for intervention by central banks, supervisors and market operators that are used to working within more defined market hours. Adrian also warned that, without reliable settlement assets such as central bank money or tightly regulated tokenised deposits, the system could become more dependent on private stablecoins and other weaker anchors.

The warning lands as large financial institutions and exchanges accelerate experiments with tokenised securities. Intercontinental Exchange, parent of the New York Stock Exchange, said in January it was developing a platform for 24/7 trading and on-chain settlement of tokenised securities, and Reuters reported in March that NYSE had teamed up with Securitize to develop a tokenised securities platform. Nasdaq has also pushed deeper into the field, winning approval in March for trading in tokenised securities and announcing partnerships tied to tokenisation infrastructure. Those moves show that tokenisation is no longer confined to crypto-native firms and is moving closer to core financial infrastructure.

JPMorgan and other major banks have also expanded blockchain-based issuance and settlement work, reflecting a broader industry belief that tokenisation can streamline debt markets, collateral management and cross-border transactions. Supporters argue that shared ledgers can shorten settlement times, reduce reconciliation costs and widen investor access to assets that have traditionally been hard to trade. The IMF does not reject those benefits, but says the transition could create a more brittle system if public safeguards fail to keep pace with private innovation.

Another pressure point lies in the connection between tokenised assets and stablecoins. The IMF has separately warned that dollar-backed stablecoins could put pressure on monetary frameworks, especially in smaller or emerging economies if deposits migrate away from banks. In the tokenised model outlined by Adrian, those risks become more pronounced because stablecoins may serve as the cash leg of trading, settlement and collateral chains. That could expose mainstream markets more directly to confidence shocks in privately issued digital money, particularly if redemption quality or reserve management comes into doubt.

Cross-border effects are another issue. The IMF note said tokenised assets and money can move across jurisdictions more easily, heightening the risk of volatile capital flows, rapid currency substitution and weaker national control over monetary conditions. That matters for regulators already trying to balance innovation with financial stability, especially in markets where digital-dollar instruments may gain traction faster than domestic safeguards can be updated.

Global regulators have been moving in the same direction. IOSCO said in a final report published in November 2025 that tokenisation creates new risks even if adoption remains limited, citing operational fragilities, legal uncertainty and confusion over the rights attached to tokenised assets. Reuters reported at the time that the watchdog was concerned about spillover risks between tokenised financial assets and the wider crypto ecosystem. Those warnings closely track the IMF’s view that tokenisation may tighten links between conventional finance and digital-asset markets in ways that are not yet fully understood.