IMF Says Tokenization Could Reshape Finance, Warns of New Systemic Risks

The International Monetary Fund said tokenization has the potential to fundamentally reshape the structure of financial markets, while warning that it could create new systemic risks if standards and regulation are not put in place.

Cointelegraph reported on July 2 that Tobias Adrian, director of the IMF's Monetary and Capital Markets Department, wrote in an IMF blog post that tokenization is "no longer a niche crypto technology." He said settlement processes that now take days could be shortened to near real time if assets, payments and record-keeping are handled on a shared ledger.

Adrian said tokenization would make financial markets more efficient while also changing the nature of risk. Risks currently borne by traditional financial intermediaries could shift to underlying infrastructure such as smart contracts, distributed ledgers and service providers. Without common technical standards and regulatory frameworks, he wrote, tokenized markets could fragment into incompatible platforms and create new systemic risks.

The IMF also said the success of tokenized finance will depend on the policy direction taken by regulators. Adrian wrote that decisions on the form of settlement assets, governance, interoperability and the role of central banks will determine whether tokenization improves the efficiency of the financial system or creates new risks.

Moves to adopt tokenization are also accelerating across the financial industry. The Clearing House, a payments organization jointly owned by major U.S. banks, is pursuing a plan to launch a tokenized deposit network in early 2027 that would support programmable payments while keeping deposits within the regulated banking system, according to the report.

The IMF's assessment is also in line with recent research from the financial industry. PricewaterhouseCoopers has said tokenization could eliminate inefficiencies in payments and asset transfers, while Moody's has said traditional financial institutions are actively preparing for a transition to a tokenized financial system.

Separately, the U.S. Securities and Exchange Commission is moving to apply existing securities laws to tokenized assets rather than create a separate regulatory regime. It is also considering an "Innovation Exemption" that would allow tokenized securities trading platforms to test services before a new framework is put in place.