A new report claims crypto tokenization is a structural overhaul of market 
plumbing, not just an efficiency tweak. Crypto Tokenization: The Hot New 
Thing? The International Monetary Fund (IMF) released a new report with fresh 
warnings related to crypto tokenization. Shifting Wall Street’s trading rails 
onto blockchain-based systems could speed up financial crises beyond 
regulators’ capacity to react, even as the technology vows to reduce costs and 
wipe out settlement lags, Bloomberg says. Tokenization is a process that moves 
assets and liabilities onto programmable ledgers, embedding settlement, margin 
and compliance into code. Tobias Adrian’s report claims that such “atomic 
settlement”, plus 24/7 markets and smart contracts can accelerate liquidity 
strains and market shocks, potentially outpacing regulators’ ability to 
respond. The Fund sees the “most consequential” shift happening inside the 
regulated system itself (banks, FMIs, asset managers), not just on DeFi rails. 
Related Reading: Here’s Why The Bitcoin And Ethereum Prices Could Keep 
Crashing This Week Currently, real world assets (RWAs) amount for above 
roughly mid‑tens of billions. According to Bloomberg, major banks, clearing 
houses and asset managers such as BlackRock and JPMorgan are already running 
live pilots of the technology, aiming to lift fee income by making trading in 
traditional assets like stocks and bonds smoother and easier. On the 
decentralized exchange’s side, Hyperliquid has recently started trading more 
volume in tokenized commodities than digital assets. Since the conflict began, 
tokenized oil has ranked among the five most‑liquidated instruments on the 
leading perp DEX at least three times. On the CEX&#8217;s side, NewsBTC reported 
that Binance has just joined the RWA’s trading hub bandwagon, with its 
recently released Gold (XAU) and silver (XAG) futures climbing into the top 
five by trading volume on Binance Futures. Crude oil benchmarks CL and BZ also 
posted volumes of $760 million and $358 million respectively. The Four Main 
Risks According To The Report The report highlights the risk of 
interoperability and fragmentation risk. Liquidity split across siloed chains 
and platforms, makes trading less efficient, increases slippage, and 
complicates risk management. Another one of the dangers of tokenization is 
that with instant, continuous settlement, trades close immediately instead of 
over 1–2 days, so there’s no natural “pause” in the system. Adding to that, 
with automated margin calls, once prices drop to a certain level, positions 
are liquidated by code, not humans, adding more sell orders into a falling 
market. In a tokenized system, some of the roles once played by regulated 
human institutions are now played by code and new types of infrastructure. 
Those come with their own failure modes, like smart-contract bugs, oracle 
failures or opaque governance. There is also a macro and emerging-markets (EM) 
risk. In EMs and smaller economies, large, fast flows of crypto tokens and 
dollar‑pegged stablecoins can weaken the local central bank’s ability to 
manage its own currency and interest rates. In simpler words, crypto and 
stablecoins can create a parallel, dollar‑based monetary system that can 
undermine local policy tools in smaller or weaker economies. The IMF itself 
also concedes crypto tokenization an upside: lower settlement frictions, 24/7 
liquidity, more transparent collateral chains, and potential gains in 
cross‑border payments and inclusion. Related Reading: Ripple Makes A $13 
Trillion Bet With This Move, And XRP Price Could Be Set To Explode A Need For 
Clearer Legal Frameworks And International Cooperation For all these reasons, 
the organization is urging for sharper legal rules and tighter international 
coordination. Without them, tokenized finance might worsen market 
fragmentation instead of delivering efficiency gains, the report warns. The 
report asks for safe settlement assets (central bank money, wCBDCs), clear 
legal treatment of tokenized claims, common standards for 
finality/interoperability, and upgraded crisis‑management tools for 24/7 
market. Besides that, it places emphasis on governance of code (who controls 
upgrades and kill‑switches), cross‑border coordination, and the risk that 
poorly harmonized rules leave tokenized markets “fragmented and peripheral”. 
If tokenization really does restructure global market plumbing, 
crypto‑adjacent rails could sit much closer to the core of the financial 
system in the next cycle. This is why the IMF is intervening early. Traders 
can expect growing institutional flows into tokenized RWAs and money‑market 
products, but also more regulatory scrutiny on leverage, settlement, and 
platform governance. Tail‑risk dynamics may change: less settlement friction 
can mean sharper intraday moves and more binary liquidity squeezes during 
stress. Jurisdictions that move fastest on legal clarity and standards are 
likely to capture tokenization volume and set de facto rules for the rest. At 
the moment of writing, BTC trades for almost $70k on the daily chart. Source: 
BTCUSD on Tradingview. Cover image from Perplexity. BTCUSD chart from 
Tradingview.

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