IMF Says Tokenization Is a ‘Structural Shift’ in Finance, Not Just a Tech Upgrade

In a new staff research note published on Thursday, The International Monetary Fund (IMF) argues that tokenization represents a “structural shift in financial architecture,” not just an incremental efficiency gain.

Authored by Tobias Adrian — the IMF’s Financial Counsellor and Director of the Monetary and Capital Markets Department — the report focuses on the tokenization of real-world assets (RWAs) within the regulated financial system, namely banks, finance infrastructure, and asset managers, arguing that’s where “the most consequential transformation occurs.”

Settlement Speed Is a Double-Edged Sword

The IMF’s core thesis is that tokenization doesn’t just make existing finance faster, but represents a shift in how trust, settlement, and risk management work. In TradFi, trust is embedded in regulated intermediaries and time-delayed processes (end-of-day settlement, batch reconciliation). Those frictions, the report notes, actually serve a purpose: they give regulators and institutions time to intervene before a crisis cascades.

Tokenization, which the note defines broadly as “the representation of financial assets and liabilities on programmable digital ledgers,” collapses those frictions, bringing what is generally referred to as the primary benefits of blockchain: near instant settlement, 24/7 liquidity, etc. But, the report notes, that this reduction of barriers introduces new challenges and risks.

“Liquidity demands materialize instantaneously,” the note warns, creating conditions where a smart contract bug or oracle failure could trigger a chain reaction before anyone can respond. The IMF argues:

“When trading, settlement, custody, and compliance are embedded in code, supervision must extend beyond market participants to the design, governance, and resilience of market infrastructures themselves. Failures can
originate in smart contracts, data feeds, or consensus mechanisms, rather than firm balance sheets.”

Who Controls the Money?

A major focus of the report is on the quetion of settlement assets. The IMF identifies three competing models: tokenized commercial bank deposits, regulated stablecoins, and what the report refers to as wholesale central bank digital currencies (wCBDCs), with each carrying different risk profiles.

Cross-Border Gaps and the Fragmentation Risk

The report highlights that a major concern around the tokenization of RWAs in regulated financial markets is jurisdictional: tokenized transactions execute across borders at machine speed, while resolution and crisis management frameworks are still built around nationally domiciled institutions.

“Tokenization challenges crisis management and resolution frameworks that are built around nationally domiciled institutions, territorially bounded infrastructures, and jurisdiction-specific legal authority.“

In its research note, the IMF calls for international coordination and legal frameworks that can govern code itself, not just the institutions that deploy it.

“The key levers of control may lie in governance keys, consensus mechanisms, or smart contract logic operating across borders,” the note reads — a setup where no single regulator has a clear handle.

The report lands as the value of tokenized RWAs continue to surge, driven in part by tokenized funds from TradFi giants like BlackRock, Franklin Templeton, and Janus Henderson.

In 2025, tokenized RWA value tripled over the course of the year as a wave of financial institutions began tokenizing U.S. treasuries, private credit, and other RWAs.

Industry forecasts project the sector could hit $100 billion by end of 2026, with more than half of the world’s 20 largest asset managers expected to have launched RWA tokens by year-end.

Meanwhile, stablecoins have already begun functioning as mainstream financial infrastructure, with the GENIUS Act providing U.S. regulatory clarity in mid-2025.

This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.