Tokenization future may bring cheaper payments, but the IMF says policy choices will decide whether it strengthens or fragments finance.
As tokenized assets move closer to Wall Street and global payments, the International Monetary Fund, the global financial watchdog, is warning that better technology won’t be enough unless policymakers keep the market from splintering into disconnected rails.
Tobias Adrian, director of the International Monetary Fund’s Monetary and Capital Markets Department, wrote in a July 2 blog post that tokenization changes more than the speed of transactions, adding that “policy choices made now will shape whether tokenization strengthens or fragments the financial system.” He wrote:
“Tokenization goes a step beyond simple digitization by embedding ownership and transfer directly within the asset itself. When a tokenized asset changes hands, smart contracts can execute trades, transfer ownership, and move payments simultaneously — all on a shared ledger.”
Adrian warns that taking away traditional friction means taking away traditional safety valves, where demands for liquidity can occur and problems can spread faster than they can be addressed.
Policy Becomes the Gatekeeper
The tokenized asset market is big enough for the issue of policy to come into play. Data from RWA.xyz shows distributed tokenized asset value at around $31.8 billion and stablecoin value at $295.5 billion as of press time.
While Adrian believes that banks aren’t going to vanish, he notes that banks’ role might transform. His point is that tokenized deposits, lending and securities could bring payment systems into programmable area, though it’s unclear how soon.
Additionally, Adrian notes that even though permissioned ledgers may improve liquidity, they also make platform governance and cybersecurity more important:
“Permissioned shared ledgers concentrate activity on fewer platforms. This consolidation improves liquidity and efficiency, but amplifies the importance of operational resilience, cybersecurity, and crisis management.”
Eventually, as Adrian argues, the future of tokenized finance will depend less on technical progress alone and more on policy decisions around public and private money, warning that without clear rules, tokenization could remain “fragmented and peripheral.”
Read more: Bitwise: Financial Advisors Prefer Stablecoins and Tokenization Over Bitcoin
