WASHINGTON — Tokenized finance could accelerate the speed of financial crises beyond the ability of central banks to respond, even as it promises greater efficiency and lower costs, according to a new report from the International Monetary Fund.
The report, authored by IMF Financial Counselor Tobias Adrian, characterizes tokenization as a “structural shift in financial architecture,” rather than a marginal improvement to existing systems.
Adrian warned that the very frictions tokenization seeks to eliminate—such as traditional settlement delays—currently act as stabilizing buffers in times of stress. Standard two-day settlement periods give central banks time to inject liquidity, net exposures and intervene before transactions are finalized. Tokenized systems, by contrast, remove those delays, compressing the window for action.
Automated margin calls and algorithmic feedback loops could further accelerate market stress, according to analysis of the report by The Block, which noted central bank emergency lending tools are designed for business-day cycles, not continuous, 24/7 markets.
Stablecoins a Key Vulnerability
The report identifies stablecoins as a key vulnerability, comparing them to money market funds that function smoothly in normal conditions but are susceptible to runs during periods of instability. Even fully backed stablecoins rely on issuers’ operational capacity and the liquidity of underlying government securities.
“Stablecoins without access to central bank reserves require additional safeguards,” Adrian wrote, including higher liquidity buffers and more conservative margining.
The IMF also noted that tokenized lending has yet to gain significant traction, citing challenges tied to blockchain pseudonymity that complicate credit assessments and force lenders to require excess collateral. Borrowers, the report said, often prefer the flexibility of traditional lending arrangements over automated smart contract enforcement.
A Challenge to ‘Code is Law’
Adrian challenged the crypto industry’s “code is law” principle, arguing that systemically important financial infrastructure must allow for human intervention during crises. He called for smart contracts to include override mechanisms for emergency situations.
The report further highlighted legal uncertainties surrounding tokenized assets, including questions about jurisdiction, asset location and enforceability in insolvency proceedings.
Three Potential Paths
The IMF outlined three potential paths for tokenized finance:
- A coordinated global system anchored by central bank digital currencies.
- A fragmented landscape of incompatible national platforms.
- A system dominated by private stablecoins, potentially weakening public financial backstops.
To mitigate risks, the IMF proposed a five-part policy framework that includes anchoring settlement in central bank money, ensuring consistent regulation across similar activities, establishing legal clarity, promoting interoperability and adapting central bank tools to operate in continuous markets.
Expansion in U.S.
The warnings come as U.S. financial institutions and exchanges expand tokenization efforts, according to The Block. The New York Stock Exchange has partnered with Securitize to develop a 24/7 tokenized securities platform, while its parent company, Intercontinental Exchange, has invested in crypto exchange OKX to explore tokenized stock trading. Nasdaq has also filed with the Securities and Exchange Commission to trade tokenized shares alongside traditional equities, and the Depository Trust & Clearing Corp. has received regulatory clearance to tokenize certain assets.
SEC Chair Paul Atkins has expressed support for tokenization initiatives, and the House Financial Services Committee held a hearing on the topic in late March.
According to data cited by The Block, tokenized real-world assets have grown to approximately $27.7 billion in on-chain value, up from about $5.5 billion at the start of 2025. The total market capitalization of stablecoins is nearing $300 billion.
