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IMF warns tokenized markets could amplify financial risks

The Cointelegraph β€‹

Cryptocoins News / The Cointelegraph β€‹ 312 Views

IMF warns tokenized markets could amplify financial risks

The global financial institution found tokenized equity markets less liquid and more volatile than traditional markets, despite growing demand for 24/7 trading.

Tokenization could reshape financial markets by making trading and settlement more efficient, but& legal uncertainty and risks to financial stability could hinder wider adoption, according to the International Monetary Fund (IMF).

In a Thursday& analysis, the IMF said tokenized financial markets are growing rapidly but& remain small compared with traditional markets, with poor interoperability and a lack of widely accepted settlement assets among the key obstacles to expansion.

The gap between tokenization’s potential and its current scale is evident in trading activity.& Tokenized repurchase agreements, or repos,& dominate tokenized trading activity, averaging $300 billion to $350 billion in daily transaction volume, compared with roughly $13 trillion traded daily in the broader US repo market.

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