Tokenized Stocks Show Real Demand But Remain Volatile and Illiquid, IMF Finds
An IMF study reveals that tokenized stocks trade mainly outside U.S. hours and suffer higher volatility and lower liquidity than traditional equities.
IMF Highlights Off-Market Dominance
The International Monetary Fund’s latest Global Financial Stability Report, released October 11, 2026, quantified the trading patterns of tokenized equities. It found that more than half of all tokenized stock transactions take place outside U.S. market hours. The analysis, based on aggregated trade data from leading decentralized exchanges, shows that the $2.3 billion tokenized stock market is still heavily skewed toward after-hours activity.
Tokenized Stocks Show Real Demand
The report documents a steady rise in the number of tokenized securities listed on major platforms. Between 2024 and 2026, the count of distinct tokenized equities grew from 30 to 45, a 50 % increase. Market participants cite lower transaction costs and 24/7 access as primary drivers. However, the growth in listings has not translated into proportional increases in average daily volume; the median daily volume remains below 5 % of the underlying share volume on regulated exchanges.
Volatility Outpaces Traditional Equities
The report compares daily price swings of tokenized stocks with those of their underlying traditional shares. Across a representative sample of 45 tokenized equities, average daily volatility exceeds that of the corresponding U.S. equities by roughly 35 %. The heightened volatility stems from lower trading volumes, thinner order books, and the absence of market makers that typically stabilize price discovery in conventional exchanges.
Liquidity Gaps Persist
Liquidity, measured by bid-ask spreads and market depth, remains a critical weakness. The IMF data indicate that the median bid-ask spread for tokenized stocks is 1.8 % of the share price, nearly double the 1.0 % spread observed in the same securities on regulated exchanges. Moreover, the average time to fill an order of 1,000 shares exceeds 12 minutes on many blockchain platforms, compared with under 2 minutes on traditional venues.
Custody and Settlement Shift
Because the majority of tokenized stock trades occur off-market, custody responsibilities move from regulated custodians to digital asset service providers (DASPs). These entities typically lack the same regulatory oversight and capital requirements as traditional custodians. The shift introduces settlement risk: if a DASPs fails to deliver the underlying shares or the tokenized representation, investors face potential loss.
Compliance Burden on Institutions
Institutional investors that have begun allocating capital to tokenized equities must now navigate a patchwork of compliance regimes. In the United States, the Securities and Exchange Commission (SEC) has issued guidance that treats tokenized stocks as securities, subjecting them to registration and reporting obligations. However, many tokenization platforms operate in jurisdictions with less stringent oversight, creating a regulatory arbitrage risk.
Market Structure Implications
The IMF findings suggest that tokenized stock markets are still in an embryonic stage. The off-market concentration limits price transparency, while the liquidity deficits deter large-block trades. For operators, the cost of providing liquidity—through market-making or fee structures—remains high, and the potential for price manipulation increases in thin markets.
Operational Consequences for Exchanges
Centralized exchanges that list tokenized equities face a dilemma: they must either enforce tighter order-book depth requirements or accept higher volatility and lower trade volumes. Decentralized exchanges, meanwhile, rely on automated market makers (AMMs) that provide constant liquidity but at the expense of higher slippage for sizable orders.
What Operators Should Watch
- Regulatory developments: The SEC’s evolving stance on tokenized securities could tighten compliance costs.
- Custody solutions: Emerging hybrid custodians that combine blockchain and traditional custody may reduce settlement risk.
- Liquidity incentives: Programs that reward market makers with fee rebates could improve depth.
Open Question
Will the tokenized stock market eventually converge with traditional equities in terms of liquidity and volatility, or will it remain a niche, high-risk venue for speculative trading? The IMF report indicates that structural changes—such as broader adoption of regulatory frameworks and improved custody solutions—are necessary before a full convergence can occur.
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