The International Monetary Fund (IMF) has released a report indicating that while tokenized U.S. equities offer advantages such as round-the-clock trading and fractional ownership, they also present significant liquidity and stability risks. The study, part of the IMF’s latest Global Financial Stability Report titled "Scaling Tokenization: New efficiencies and new vulnerabilities," examines the activity of key tokenized equities, including Tesla (TSLA), Nvidia (NVDA), and Alphabet (GOOG).
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The report reveals that more than half of trades in tokenized stocks occur outside of regular U.S. market hours, with about 80% of these transactions involving less than one share. This suggests that investors are appreciating the continuous access and lower entry costs associated with tokenized stocks. Furthermore, the study found that overnight price movements in tokenized equities often provide significant information, as over 85% of these shifts are reflected in traditional share prices shortly after U.S. markets open.
Despite these advantages, the IMF emphasizes that the market for tokenized equities remains small and fragmented, with an estimated value of $2.3 billion compared to a total tokenized real-world asset market of approximately $65 billion as of July 31. In contrast, the global equity market capitalization is projected to be just under $160 trillion in 2025.
The report also states that tokenized stocks are approximately 1.5 times more volatile than their conventional counterparts and have lower liquidity. The fragmented nature of the current market, which operates across various private platforms and public blockchains, poses challenges to achieving the efficiencies that tokenization promises.
Elevated risks from automated trading features and 24-hour operations, such as automated margin calls and collateral transfers, could complicate market management during shocks. While these risks are currently minor due to the small size of the tokenized markets, the IMF argues for the development of legal frameworks, liquidity safeguards, and interconnected trading systems as the market evolves.
Companies like Bullish have begun offering tokenized equity trading, and exchanges including OKX and Intercontinental Exchange also plan to introduce trading platforms for these assets, enhancing competition in this emerging space.