IMF flags fragmentation as tokenized asset market expands
The IMF’s October financial stability report says public tokenized assets outside repos total about $65 billion, while tokenized equities are only $2.3 billion and more than 70% of that sits on Ondo Finance and Backed Finance. Repos are far larger, with an average daily volume of $303 billion, showing collateral management is a leading use case. The fund says legal clarity, consistent regulation, and better links between platforms and traditional systems are needed, as more than half of tokenized equity trades occur outside US market hours and about 80% of transactions are for less than one share.
The IMF’s October financial stability report puts public tokenized assets excluding repos at roughly $65 billion. Tokenized equities account for just $2.3 billion, with Ondo Finance and Backed Finance hosting over 70% of that total. Repos are much bigger, averaging $303 billion daily, indicating collateral management is the clearest current application.
The report also notes that most tokenized equity trading happens outside US market hours, and roughly four-fifths of transactions involve less than one share. It calls for clearer legal foundations, more consistent rules, and stronger links between tokenized platforms and conventional financial infrastructure. Activity remains concentrated in the US and a few offshore centers, while platform interoperability is still limited.
Tokenized markets could gradually affect retail investors, institutions, and regulators. Fractional shares and round-the-clock trading may broaden access, yet smaller participants might face less liquid and more volatile venues. Faster settlement could reduce some frictions, but may also compress the time available to manage liquidity during stress. Banks, brokers, and infrastructure providers may need to adapt to linked ledgers and private settlement assets, while regulators could face pressure to clarify rules and limit contagion risks. The ultimate social effect may depend on whether safeguards and interoperability improve alongside adoption.