Tokenized finance could make financial crises unfold faster than central banks can respond, even as it promises to cut costs and eliminate settlement delays, the International Monetary Fund warned in a report published Thursday.

The report, authored by IMF Financial Counselor Tobias Adrian, argued that tokenization is a "structural shift in financial architecture" rather than a marginal efficiency gain. It is among the most detailed policy assessments of tokenization's systemic risks published to date.

Adrian's central concern is that the inefficiencies tokenization aims to eliminate actually function as shock absorbers. Traditional two-day settlement windows give central banks time to mobilize liquidity, net exposures, and intervene before settlement becomes final. Tokenized systems remove those buffers by design.

Automated margin calls and algorithmic feedback loops compress the time available for intervention, the report said. Central bank emergency lending facilities were built for business-day cycles, not 24/7 automated environments.

Adrian singled out stablecoins as a structural weak point, comparing them to money market funds: functional in calm conditions but vulnerable to runs when confidence breaks down. Even fully backed stablecoins depend on issuers' operational capacity to meet redemptions and on the liquidity of underlying government securities markets, he wrote.

"Stablecoins without access to central bank reserves require additional safeguards at the infrastructure level, including higher liquidity buffers and conservative margining, to compensate for settlement asset risk," Adrian wrote in the report. 

The report also noted that tokenized lending "has not grown meaningfully to date," attributing this to blockchain pseudonymity, which limits credit assessment and forces lenders to rely on overcollateralization. Borrowers, Adrian added, tend to prefer the flexibility to negotiate with lenders rather than face automated smart contract enforcement.

Adrian directly challenged the crypto-native principle that "code is law," arguing that in systemically important institutions, legal mandates for stability must prevail over automated execution. He called for smart contracts in critical-level infrastructure to include predefined override mechanisms for emergency conditions.

"When assets exist as tokens on a distributed ledger, questions arise regarding the applicable law, the location of the asset, and the enforceability of claims in insolvency," Adrian wrote of the legal uncertainty regarding tokenized assets. 

The report laid out three scenarios for how tokenized finance could evolve: a coordinated system anchored by wholesale central bank digital currencies, a fragmented patchwork of incompatible national platforms, or a world dominated by private stablecoins where public backstops weaken.

A five-pillar policy roadmap called for anchoring settlement in safe money, consistent regulation across equivalent activities, legal certainty for tokenized assets, interoperability standards, and adapting central bank tools for continuous-operation environments.

The IMF's caution arrives as U.S. exchanges move aggressively. The NYSE tapped Securitize in March to build a 24/7 tokenized securities platform, while NYSE parent ICE invested in OKX at a $25 billion valuation to explore tokenized stock trading. Nasdaq filed with the SEC to trade tokenized shares on the same order book as traditional equities, and the DTCC received a no-action letter in December to tokenize certain custodied assets.

SEC Chair Paul Atkins has been openly supportive of the trend. The House Financial Services Committee held a hearing on tokenization in late March, before the report's publication. 

A separate IMF report in December warned that dollar-backed stablecoins could accelerate currency substitution in countries with weak monetary systems, a theme Adrian expanded in the new paper. He wrote that emerging economies are "particularly exposed" if privately issued global stablecoins gain traction in markets with weaker currencies.

Tokenized real-world assets have reached roughly $27.7 billion in distributed onchain value, according to RWA.xyz data, up from about $5.5 billion at the start of 2025. Total stablecoin market capitalization sits near $300 billion.