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The IMF Measured Tokenized Markets. Three of the Four Things Holding Them Back Are Rules. The Fourth Is Money.

For three years the tokenization argument has been made mostly by people selling it. This month the International Monetary Fund measured it instead, and the result is less flattering than the pitch and far more useful.



The October Global Financial Stability Report devotes its third chapter to tokenization. It is the first time a multilateral institution has sized the market, tested its claims empirically, and named what is actually blocking it. Four things, by the Fund's account. Three of them are rules. The fourth is money.



The size, with the caveats the headline numbers usually lose.



The public market for tokenized real-world assets, excluding repurchase agreements, reached about sixty-five billion dollars. Inside that, tokenized fixed income accounts for roughly forty-eight billion, of which credit is thirty point four billion. Tokenized money market funds sit near seventeen and a half billion. Tokenized equities are small at about two point three billion, with two platforms holding more than seventy percent of the value. Private tokenized markets add at least eight billion in tokenized bonds. There were three hundred and eight point four million holder addresses at the start of October.

Then the number that makes everything else look small. Tokenized repurchase agreements reached three hundred and three billion dollars of average daily volume over a thirty-day window.

Two caveats travel with that figure and almost never survive the retelling. It is a volume measure, not an outstanding balance, so it is not comparable to the sixty-five billion above. And the Fund notes that these transactions remain largely concentrated among affiliated entities. In plain terms: a great deal of it is institutions moving collateral between their own books. That is genuinely useful and it is not yet a market.



The Fund tested the claims, and some of them did not hold.



This is the part worth reading twice, because it is the first independent test of what tokenized markets actually deliver.

The Fund analysed the five most liquid tokenized US equities across eleven venues, more than two million observations over three hundred and sixty-five trading days. Three findings support the case for tokenization. Two complicate it.

On the supportive side. More than fifty percent of trading activity happens outside regular US market hours, which means continuous availability is not a technical curiosity but a source of real demand. About eighty percent of trades are for less than one share, confirming that fractionalisation answers something. And the pass-through coefficient, measuring how much of an overnight on-chain price move the traditional equity has absorbed five minutes after the open, runs between eighty-seven and ninety-nine percent. Tokenized prices carry information that traditional markets act on.

On the complicating side. Realized volatility in tokenized venues is roughly one and a half times higher than in traditional markets. And liquidity is materially worse, particularly on decentralised venues, where a given volume of trading moves the price far more than it would on a conventional exchange.

The Fund is careful, and anyone quoting it should be equally careful: it says these findings should be interpreted with caution given the incipient nature of the market, and that much of the gap reflects small size rather than a flaw in the design. Thin markets are volatile. That is not news. What is new is that somebody with no commercial interest went and measured it.





Having sized and tested the market, the Fund names what is holding it back. Legal certainty. Regulatory clarity. Interoperability. And the availability of safe, sound and scalable settlement assets.

The first three are rules, and rules move at the speed of legislatures. Legal certainty means knowing what rights a token actually confers, how it is treated in insolvency, and which jurisdiction governs a cross-border claim. Regulatory clarity means applying existing securities, banking and payments law consistently rather than inventing a parallel regime. Interoperability means that assets and money can move between platforms without each network becoming an island.

The fourth is different in kind, because it is not waiting on anyone's parliament. The Fund's position is direct: tokenized trading without a trusted cash leg increases settlement risk, limits delivery versus payment, and prevents end-to-end programmability. And where private settlement assets are used, they introduce credit and liquidity risk tied to their issuer.

That is the constraint that is already solvable, and it is the one the market has been quietly solving.



Two institutions have already tested the fourth constraint in practice.



The Hong Kong Monetary Authority published its Project Ensemble business use case report this month, covering experiments run since August 2024 with tokenized deposits and delivery-versus-payment settlement. The use cases tested read like a tour of the same problems: subscription and redemption of tokenized money market funds, bond issuance and settlement, intraday repurchase agreements for liquidity, cross-border intragroup treasury, tokenized real-world assets backed by charging station revenue, carbon credits, supply chain finance, and electronic bills of lading.

Separately, Citi published work with DTCC and Swift concluding that banks have invested more than a hundred billion dollars in blockchain since 2020 and that the constraint holding back institutional scale is not the technology but market fragmentation. Swift's shared ledger went live on 9 July with seventeen banks across six continents.

And the demand side is more measured than the enthusiasm suggests. Lloyds surveyed a hundred and one financial institution decision makers in April and May. Forty-one percent expect tokenization to have a significant or transformational impact, but the weight sits on significant at thirty percent, with only eleven percent saying transformational. Asked where the value lands, sixty percent pointed to payments and settlement speed, forty-one percent to collateral and liquidity management, and thirty-nine percent to tokenized deposits and cash instruments.

Read those three together and the shape is consistent. The institutions testing tokenization are not testing whether tokens can exist. They are testing whether money can settle alongside them.



The same chapter prices the risks, and the trade-offs are not one-sided.



Having measured the market, the Fund spends the second half of the chapter on what could go wrong, and its framing is more useful than the usual list. Tokenization, it argues, does not change the nature of financial stability risks. It changes the channels through which vulnerabilities accumulate and shocks travel.



Three examples from its own framework, each of which cuts both ways.


 lowers operational risk and legal uncertainty by automating issuance, settlement and corporate actions. The same automation can accelerate margin calls and liquidations, and it introduces a new failure mode in smart contract design.



improves coordination and capital efficiency by letting assets be combined and reused across applications. It also propagates contagion and leverage across those same connections, and widens the surface available to an attacker.



removes principal risk by ensuring that both legs of a transaction settle together or not at all. In doing so it increases dependence on the underlying infrastructure and removes the timing gaps that, in conventional settlement, absorb operational disruption. The Fund notes a second-order effect that matters for anyone designing a repo platform: moving settlement closer to real time can reduce the netting that makes today's market efficient, so faster settlement can raise intraday liquidity needs rather than lower them.

None of that is an argument against tokenization. It is an argument for building the controls at the same time as the rails, which is a different discipline from building the rails and adding controls when someone asks.





Meridian Finance is one connected system on Arc, Circle's Layer 1, rather than a set of products sharing a logo, and the fourth constraint is the reason the pieces belong together.

Meridian Pay accepts USDC and EURC at checkout, gasless for the payer, settling in under a second. YieldVault wraps Circle USYC so a balance waiting on a condition earns Treasury yield rather than sitting idle, withdrawable at any time, yield from the underlying Treasuries with no fixed or guaranteed rate offered or implied. PaymentStream pays by the second for work delivered continuously rather than monthly. A balance can sit in USDC, EURC, USYC or cirBTC and move between them without leaving the chain. Firmata carries the identity, reputation and conditional settlement layer.

On Arc, gas is paid in USDC and finality lands in under a second, which means the settlement asset and the transaction currency are the same thing. That removes the gap the Fund describes, where a tokenized asset settles against a cash leg that lives somewhere else and arrives later.

The money market fund figure deserves one more line. Seventeen and a half billion dollars of tokenized money market funds is the whole addressable market for an instrument that holds a waiting balance in Treasury exposure rather than in idle cash. That is small today and it is the number to watch, because a conditional payment that holds funds against a condition is only economic if the held funds are doing something while they wait.





All of it runs on Arc testnet, chain 5042002. Twenty contracts, each verified on Arcscan from the second of deploy, roughly one hundred thousand transactions and four thousand on-chain holders. Not mainnet.

Arc's own public mainnet went live on 16 September with eleven founding validators, so the obvious question is why we are not on it. An independent security audit covering the contracts and the front end gates that migration, and it has not happened yet. We could have pushed the same bytecode the week Arc launched. We did not.

For a piece built on the Fund's finding that settlement safety is the binding constraint, that matters. Arguing that the cash leg has to be trustworthy while running unaudited contracts would be the wrong way round.



, all of which the Fund's own framework makes measurable.

Whether the tokenized repo figure broadens beyond affiliated entities. The volume is already enormous. The question is whether it becomes a market with unrelated counterparties or stays an internal collateral optimisation.

Whether tokenized money market funds grow faster than tokenized equities. The Fund measured equities as more volatile and less liquid than their traditional counterparts. Money market funds are a different product with a different test, and they are the instrument institutions actually said they wanted.

And whether the fourth constraint closes before the first three. Legal certainty and regulatory clarity depend on legislatures. The settlement asset does not, which is why it is the one that moves first.



❓

No, and it endorses no provider. The chapter is analytical. It sizes the market, tests specific claims empirically, identifies four constraints on growth, and sets out financial stability risks that could emerge if tokenization scales. It should be read as a measurement exercise rather than a recommendation.



Is the three hundred and three billion dollar repo figure comparable to the sixty-five billion 

❓

No. The sixty-five billion is the value of tokenized real-world assets outstanding. The three hundred and three billion is average daily trading volume over a thirty-day window, and the Fund notes it remains largely concentrated among affiliated entities. They answer different questions and should never appear in the same comparison.



If tokenized equities are more volatile and less liquid, why does tokenization help 

❓

Because volatility and liquidity in that study are mostly a function of size, which the Fund says explicitly. The more interesting finding is the eighty-seven to ninety-nine percent pass-through, which shows the two markets respond to the same information. Separately, the instruments institutions say they want are not equities. They are payments, collateral, and tokenized cash.



Does Meridian perform anti-money-laundering or know-your-customer checks 

❓

No. Where a broker, merchant or institution is the counterparty, that party keeps its own customer due diligence and its own regulatory obligations exactly as it does today. What the stack provides is settlement and proofs.



❓

No. The stack runs on Arc testnet, chain 5042002, with every contract verified on Arcscan. Migration is gated by an independent security audit covering the contracts and the front end. Testnet live, audit before mainnet.



, Chapter 3, Scaling Tokenization: New Efficiencies, New Vulnerabilities, 

Project Ensemble Business Use Case Report

, Hong Kong Monetary Authority, October 2026.


: Interoperability, Programmability, and the Path to Institutional 

Financial Institutions Sentiment Survey 2026

, Lloyds, fieldwork 13 April to 19 May 2026, 101 respondents.

Built on Arc. Powered by Circle.



Not investment advice. Nothing here endorses any provider or forecasts the decisions of any regulator.

🏛️ The IMF Measured Tokenized Markets. Three of the Four Things Holding Them Back Are Rules. The Fourth Is Money.

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