IMF identifies growing interest in token-based stocks, warns market remains volatile and thinly traded

Blockchain-powered equity tokens are being utilized for smaller and after-hours transactions. According to the IMF, liquidity, regulatory frameworks, and settlement infrastructure have not evolved at the same pace.

• Tokenized U.S. equities provide continuous trading and allow fractional ownership, with over half of all transactions occurring beyond standard market hours and roughly 80% of trades involving less than a single share, as discovered by the IMF.
• Overnight price fluctuations contained valuable insights, with more than 85% of these movements mirrored in traditional shares within five minutes of market open.
• The IMF noted that tokenized equities constitute a tiny, fragmented sector requiring enhanced legal protections, improved liquidity mechanisms, and better system interoperability.

Tokenized stocks are already fulfilling two long-standing promises of cryptocurrency markets: non-stop trading and the capability to purchase partial shares. However, they exhibit substantially lower liquidity and heightened volatility compared to their traditional equivalents, according to a recent International Monetary Fund (IMF) analysis.

The IMF’s most recent Global Financial Stability Report, titled Scaling Tokenization: New efficiencies and new vulnerabilities, explores the five most actively exchanged tokenized U.S. equities, including Tesla (TSLA), Nvidia (NVDA) and Alphabet (GOOG), alongside instruments like the Nasdaq 100 Index, across both centralized and decentralized platforms.

More than half of the trading volume occurred outside normal U.S. market hours, the IMF discovered. Approximately 80% of transactions were executed for amounts under one share. In the report, these metrics serve as proof that investors prioritize round-the-clock availability and accessible entry points, beyond just the underlying technology.

The research also revealed that overnight shifts in tokenized stocks conveyed meaningful signals for their underlying assets. Once U.S. markets reopened, over 85% of the overnight change in tokenized shares was reflected in their conventional counterparts within five minutes, the IMF reported.

«Moving assets onchain is only the first step,» said Bitget CEO Gracy Chen. «The bigger question is how efficiently that capital can work once it is there.»

The IMF’s stance is that although the application holds merit, the market remains in its early stages. It stated that the tokenized real-world asset (RWA) market has expanded quickly, estimating its size at approximately $65 billion as of July 31.

Tokenized equities represented about $2.3 billion of this total. This contrasts with a projected 2025 global equity market capitalization of just under $160 trillion, per the Securities Industry and Financial Markets Association (SIFMA), the trade organization for U.S. securities.

Nonetheless, the tokenization initiative is expanding. Bullish (BLSH), a Gibraltar-based crypto firm and CoinDesk’s parent company, launched tokenized equity trading in August. Earlier this month, OKX and Intercontinental Exchange (ICE) — operator of the New York Stock Exchange — submitted filings for a platform offering 24/7 trading in tokenized U.S. shares.

They are not the only ones. Crypto exchanges Coinbase Global (COIN), Kraken and Binance also provide tokenized stock trading, as does Robinhood Markets (HOOD).

According to the IMF, tokenized stocks exhibited volatility roughly 1.5 times greater than equivalent shares traded on traditional venues and were notably less liquid.

The challenge isn’t merely that blockchain markets are small. For tokenization to deliver its promised cost and time efficiencies, it requires a sufficient number of issuers, investors, trading platforms, and settlement assets operating on compatible systems. Presently, the market is divided among private platforms, public blockchains, custodians, and settlement tools that frequently lack integration.

The IMF stated that tokenization has the potential to eliminate portions of manual reconciliation work firms perform, automate processes such as dividend distributions, and accelerate collateral transfers. It cautioned that automated margin calls, liquidations, cross-platform collateral movement, and continuous trading could intensify the impact of market shocks.

The risks remain limited due to the current small scale of tokenized markets, the IMF said. Yet its report contends that legal rules governing ownership, liquidity safeguards, system linkages, and settlement arrangements must be established before the market expands substantially.

Diversified RWA stablecoins sustain 5-7% yield from real credit as crypto funding compresses to ~4%. GENIUS pushes yield off-chain; TAM grows to $4B in 3 years.

Why it matters:

Diversified RWA stablecoins sustain 5-7% yield from real credit as crypto funding compresses to ~4%. GENIUS pushes yield off-chain; TAM grows to $4B in 3 years.