IMF warns tokenization could remake finance or fracture it

The International Monetary Fund has said tokenization could change how financial markets settle trades, manage payments, and record ownership.

In a July 2 blog post, Tobias Adrian, the IMF’s financial counselor and director of the Monetary and Capital Markets Department, said policy choices made now will decide whether tokenized finance “strengthens or fragments” the financial system.

Adrian said tokenization is more than a tool for faster payments. It moves assets and liabilities onto shared digital ledgers, where execution, clearing, and settlement can happen at the same time. That could reduce delays in markets that still depend on separate systems, manual checks, and later reconciliation after trades close.

Faster markets bring new risks

The IMF said tokenization can make settlement faster and payments cheaper, but it can also change where risk sits. In traditional markets, delays give banks, brokers, and supervisors time to respond to errors or stress. In tokenized markets, smart contracts can move payments, collateral, and ownership within moments.

That speed can remove old buffers. Automated margin calls, instant redemptions, and 24/7 settlement could make liquidity needs appear faster than firms can manage them. Adrian warned that risk could move away from bank balance sheets and toward the platforms, code, and service providers that run tokenized markets.

Banks test tokenized settlement rails

The warning comes as large financial firms move tokenization deeper into regulated finance. As crypto.news reported, major U.S. banks are backing a tokenized deposit network through the Clearing House, with a launch targeted for the first half of 2027. The system would allow banks to settle tokenized deposits around the clock while keeping deposits inside the banking sector.

Recent market activity also shows that tokenization is spreading into securities. As previously reported, Securitize tokenized its own NYSE-listed shares on Solana and Avalanche on the day it began public trading. Ondo Finance also brought BlackRock’s IVV ETF and Micron shares onto Ethereum through a model designed to keep the underlying securities inside regulated U.S. custody.

Regulators weigh ownership and code oversight

The IMF said tokenized finance needs clear rules on settlement assets, platform governance, interoperability, and the role of central banks. It also said legal clarity matters because investors must know whether tokenized records prove ownership, whether settlement is final, and which court has authority when markets cross borders.

In the United States, regulators are already reviewing tokenized securities. As crypto.news reported, the SEC has explored an innovation exemption for tokenized securities that could let some blockchain-based products trade under tailored rules. Later, the agency reportedly delayed the proposal after exchanges raised questions about shareholder rights and ownership verification.

The IMF’s message adds a global policy layer to that debate. Faster settlement may improve market systems, but weak standards could split liquidity across competing platforms. If tokenized assets move across borders in real time, supervisors may also have less time to respond during stress.

Adrian said central banks, regulators, and market operators must decide how tokenized finance should use public and private money. They must also decide how platforms should connect and how critical smart contracts should be supervised. Without common rules, tokenization may stay split across separate systems instead of becoming a safer settlement model for global finance.