IMF Warns Tokenization Could Spread Crypto Risks Across Global Finance

The IMF has published a report warning of the potential risks associated with tokenization in the financial system. Tokenization refers to the process of moving assets such as money, bonds, and funds onto shared blockchains, allowing for instant settlement without traditional intermediaries.

According to the report, atomic settlement – which completes transfers in a single step – can reduce counterparty exposure across trading venues. However, this also means that firms must manage liquidity in real-time, which could lead to faster stress events and compressed timelines for discretionary intervention.

The IMF has identified stablecoins as a bridge between crypto markets and traditional finance, but notes that their reliability depends on reserve backing and smooth redemption systems. The agency has warned of the potential for runs during periods of stress, which could strain reserves and link financial institutions.