IMF Finds Real Demand for Tokenized Stocks but Warns of Volatility and Liquidity Gaps
The IMF sees growing interest in tokenized US equities, noting 24/7 trading and fractional ownership, but flags higher volatility, lower liquidity, and systemic risks.
According to CoinDesk, the International Monetary Fund’s latest Global Financial Stability Report confirms that investors are already using tokenized versions of U.S. equities, but the market remains small, volatile and thinly traded. The findings matter because they show the promised benefits of crypto—always‑on markets and fractional ownership—are materializing, yet the risks that come with a fragmented, 24‑hour ecosystem are still very real.
What happened
The IMF study, titled Scaling Tokenization: New efficiencies and new vulnerabilities, looked at the five most actively traded tokenized U.S. stocks – Tesla (TSLA), Nvidia (NVDA), Alphabet (GOOG) and the Nasdaq‑100 Index among them – across both centralized exchanges and decentralized platforms. More than half of all token trades happened outside regular U.S. market hours, and roughly 80 % of those trades involved less than a full share. In other words, investors are using tokenization to access markets when they’re closed and to buy tiny slices of expensive stocks.
The report also measured price behavior. Tokenized stocks were about 1.5 times as volatile as the same shares on traditional venues and were significantly less liquid. Despite the thinness, the IMF found that overnight price swings in the token market carried real information: once the U.S. exchanges opened, over 85 % of the token‑driven movement showed up in the underlying stock within five minutes.
The IMF put the market size in perspective. As of July 31, tokenized real‑world assets (RWAs) were worth roughly $65 billion, with tokenized equities accounting for about $2.3 billion. By comparison, the 2025 global equity market was just under $160 trillion, according to the Securities Industry and Financial Markets Association. The report notes that a handful of platforms – Bullish, OKX, Intercontinental Exchange (owner of the NYSE), Coinbase, Kraken, Binance and Robinhood – already offer tokenized stock trading.
Why it works that way
Tokenized stocks are digital representations of real shares that live on a blockchain. Each token is linked to a physical share held by a custodian; the blockchain records ownership, enabling transfer without the paperwork that traditional brokers use. Because the ledger is always online, the tokens can be bought, sold or transferred at any hour, and the underlying smart‑contract code can split a share into arbitrarily small fractions.
The 24‑hour access and fractionalization create demand from two sides. Retail investors who cannot afford a whole share of, say, Tesla can still gain exposure, and traders in time zones far from New York can react to news immediately. That explains why more than half of the activity occurs outside U.S. market hours and why 80 % of trades are sub‑share.
However, the same mechanics also generate higher volatility and lower liquidity. First, the pool of participants is small; a handful of orders can move the price dramatically. Second, the market is split among many venues – some are public blockchains, others are private platforms – so depth is scattered. Third, settlement still relies on custodians moving the real share when a token changes hands, a step that can be slower or more costly than a pure on‑chain transfer. The IMF points out that these frictions mean automated features like margin calls or rapid liquidations could amplify shocks, especially when trading runs nonstop.
What changes because of it
The IMF’s take is that tokenized equities are a real use case but remain in a fragile early stage. The $2.3 billion slice of tokenized stocks is tiny compared with the $160 trillion equity universe, so systemic risk is limited for now. Yet the report warns that as the market grows, several weaknesses could surface.
Legal certainty around ownership is the first hurdle. Holding a token does not automatically confer the same shareholder rights unless the custodial chain is airtight, and regulators have not yet standardized those rules. Second, liquidity safeguards – such as market‑making incentives or cross‑venue coordination – are missing, which explains the observed thin order books. Third, the settlement infrastructure is fragmented; moving collateral between platforms or executing automated margin calls could strain the system when price swings are sharp.
If developers succeed in linking the disparate platforms, automating dividend distribution and streamlining collateral transfers, the cost and time savings touted by tokenization could become tangible. In practice this usually means fewer manual reconciliations for brokers and faster access to capital for traders. But the trade‑off is that any technical glitch or regulatory snag could freeze a market that never sleeps, making a flash crash harder to contain.
From a holder’s perspective, the main takeaway is that tokenized stocks offer genuine convenience – 24/7 trading and the ability to buy a slice of an expensive share – but they do not yet match the depth and stability of traditional exchanges. Investors should treat them as a supplemental way to gain exposure rather than a replacement for standard brokerage accounts. What we would watch are three signals: the emergence of interoperable settlement layers, clearer legal definitions of token ownership, and the introduction of liquidity‑boosting mechanisms such as designated market makers on the major token venues. Should those pieces fall into place, the $2.3 billion market could expand, but until then the volatility and illiquidity flags remain the dominant narrative.
