Key Takeaways The IMF’s $65 billion figure refers to daily trading volume in tokenized assets, not the total value of […]
The post IMF Warns $65B Tokenized Market Has a Liquidity Problem appeared first on Coindoo.
Key Takeaways
- The IMF’s $65 billion figure refers to daily trading volume in tokenized assets, not the total value of tokenized real-world assets.
- Tokenized markets remain small, fragmented, relatively illiquid and more volatile than conventional counterparts.
- A token can be transferable without being easy to sell or eligible for redemption.
- As tokenized markets grow, faster settlement needs to be matched by enforceable rights, reliable liquidity and suitable safeguards.
The $65 billion figure measures activity, not market size
In its October 2026 analysis of tokenized finance, the International Monetary Fund put daily trading volume in tokenized assets, including credit instruments, money market funds and equities, at about $65 billion.
That figure does not measure the value of all tokenized assets outstanding. It measures trading activity. The IMF separately estimated daily tokenized repo volume at roughly $300 billion to $350 billion, compared with about $13 trillion in the conventional U.S. repo market.
Repos account for much of today’s tokenized activity because they are short-term secured funding instruments used heavily by financial institutions. The comparison shows both the potential of tokenized finance and its current limits: even its largest segment remains small beside the conventional market it seeks to modernise.
The IMF’s concern is not that tokenization lacks speed. It is that fast issuance, trading and settlement do not automatically create a dependable exit when an investor needs cash.
Transferable, saleable and redeemable are three different things
“Liquidity” is often used as though it describes a single feature. For tokenized assets, it is more useful to separate three questions that can produce very different answers.
| Exit route | Question for the holder | Where friction can appear |
|---|---|---|
| Transfer | Can the token move to another eligible wallet? | Compliance controls, wallet access, network availability and transfer restrictions. |
| Secondary-market sale | Is there an eligible buyer near a fair price? | Thin order books, fragmented venues, limited market makers and separate settlement assets. |
| Redemption or contractual exit | If the product offers redemption, can the holder claim cash or underlying value? | Product terms, investor eligibility, dealing windows, operational capacity and issuer obligations. |
A tokenized fund may be transferable around the clock while direct redemptions remain available only on scheduled dealing days or only to authorised investors. A token can therefore move quickly without giving every holder a quick route to cash.
The same principle applies to tokenized equities. Some products give the holder a contractual or beneficial interest rather than direct registration as the shareholder. The exact claim depends on the issuer’s documents, custody arrangement and jurisdiction. As explained in our guide to tokenized-stock ownership, the legal right behind the token can matter more than the balance displayed in a wallet.
Fragmentation can turn one asset into several smaller markets
The IMF says tokenized trading remains fragmented across platforms, networks and settlement arrangements. Rather than bringing every buyer and seller into one deeper market, separate systems can divide liquidity into smaller pools.
Consider two tokenized versions of a similar Treasury product. One may trade on a permissioned ledger between institutions, while another is available on a public chain with different wallets, stablecoins and compliance rules. They may reference comparable assets, but the holders do not necessarily share the same pool of buyers.
A holder who cannot move directly between those venues may have to sell into a thinner market at a discount, wait for a redemption window or use an intermediary to shift between systems. Interoperability matters because it determines whether buyers, assets and settlement money can connect, or remain isolated.
24/7 trading does not guarantee 24/7 price discovery
The IMF found that more than half of the tokenized-equity trading it examined took place outside traditional market hours. About 80% of the analysed trades were for less than one share, showing demand for continuous access and fractional ownership.
Those features can be useful, but an overnight token price may form in a smaller market than the one that sets the main daytime price of the underlying share. The underlying exchange, its main market makers and parts of the custody or settlement chain may be unavailable even while the token continues trading.
The IMF found that overnight tokenized-equity returns were reflected in traditional equity prices shortly after markets opened, suggesting that both markets respond to similar information. That does not remove the liquidity problem: tokenized markets remain relatively illiquid and more volatile than traditional counterparts, according to the Fund.
The practical distinction
Continuous trading gives a holder more hours to find a price. It does not ensure that enough buyers, cash and settlement capacity will be available at that price.
Faster settlement needs stronger safeguards in a stressed market
Traditional financial markets use separate stages for trading, settlement, reconciliation and funding. Those steps add costs and delays, but they also give firms time to net obligations, mobilise liquidity and resolve operational issues.
Tokenized systems can compress those stages. In normal conditions, that can reduce settlement risk and operational friction. The IMF is not arguing for slower markets; it is warning that risk controls, liquidity facilities and operational safeguards need to keep pace when older buffers shrink.
Stress can build quickly when thin markets, leverage, shared settlement assets and automated collateral or redemption rules interact at the same time. As tokenized systems become more connected, the IMF warns that familiar risks, including fire sales, liquidity runs and contagion, could spread through new channels.
Five questions before calling a tokenized product liquid
- Who can buy the token? Check whether the secondary market has active, eligible buyers and whether market makers are consistently present.
- What legal right does it represent? Ownership, beneficial interest and a contractual claim can produce different outcomes in a dispute or insolvency.
- Is redemption offered? If so, identify who can use it, what assets or cash are delivered, and how long the process takes.
- What happens outside the underlying market’s hours? A token may keep trading while the asset, issuer or settlement chain behind it operates on a narrower schedule.
- Which systems are required to complete the exit? The blockchain is only one part of the process; the issuer, custodian, broker, stablecoin or bank-money rail may be just as important.
The real test for tokenization is the exit
The IMF’s analysis recognises the appeal of faster transactions, continuous access and fractional ownership. Its warning is that those benefits do not by themselves answer the harder question of how an investor exits when many holders need liquidity at once.
Before treating a tokenized product as liquid, investors should identify who can buy it, who, if anyone, must redeem it, and what enforceable legal claim sits behind the token. A fast transfer is useful, but it is not the same thing as a dependable exit.
This article is provided for informational purposes only and does not constitute financial, legal or investment advice. Tokenized assets can carry market, liquidity, custody and issuer risks. Review official product documents before investing.
The post IMF Warns $65B Tokenized Market Has a Liquidity Problem appeared first on Coindoo.
Source: https://coindoo.com/imf-warns-tokenized-market-liquidity-problem/
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Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research (DYOR).
