Tokenized stocks are attracting meaningful retail activity outside conventional Wall Street hours, but the market remains volatile, thinly traded and concentrated, according to the International Monetary Fund’s latest Global Financial Stability Report.
More than half of trading in tokenized equities takes place outside regular U.S. market hours, the IMF found. Around 80% of transactions involve less than one share, highlighting demand for fractional exposure to publicly traded companies. Tokenized stocks are blockchain-based instruments designed to track the price of listed shares.
What the IMF found
The IMF examined the five most liquid tokenized U.S. equities across 11 trading venues over 365 days. The sample included tokens linked to Tesla, Nvidia and the S&P 500.
The study found that tokenized prices were not simply detached from traditional markets. When U.S. markets reopened, conventional shares reflected between 87% and 99% of the price movements recorded overnight by their tokenized counterparts. That suggests trading in the tokenized market can contain information that is later incorporated into regular stock prices.
However, the tokenized versions were approximately 1.5 times more volatile than the underlying stocks. They were also less liquid, with the difference particularly pronounced on decentralized exchanges. On those platforms, tokenized prices moved further away from prices in traditional markets.
The market is also small and heavily concentrated. Its total value is estimated at about $2.3 billion, while products from Ondo Finance and Backed Finance’s xStocks represent more than 70% of the market. The IMF described both as synthetic tokens that provide price exposure without giving holders direct ownership of the underlying shares.
Regulators urged to watch 24/7 trading
The IMF said its conclusions should be treated cautiously because tokenized equities are still at an early stage. It said systemic risks remain limited for now, but recommended that regulators consider circuit breakers for markets that operate around the clock. It also called for closer monitoring of connections between tokenized assets and traditional financial markets.
Circuit breakers are mechanisms that pause trading after unusually large price moves. The issue is especially relevant to tokenized stocks because they can trade when U.S. exchanges are closed, creating a period in which their prices may move without an immediately open conventional market for comparison.
The report follows an earlier IMF warning that tokenized finance and stablecoins could intensify financial crises. According to Decrypt, the findings arrive as major financial and crypto companies expand their tokenization efforts. The NYSE plans to reach crypto investors through Blockchain.com, while ICE, the exchange’s owner, is working with OKX on 24/7 tokenized stock trading under the SEC’s new innovation exemption.
Securitize has brought tokenized Nvidia, Apple and Amazon shares to Solana, with additional networks planned. Cboe has agreed an S&P deal involving tokenized options, and Coinbase launched tokenized stocks for users outside the United States on Base in August.
Moneyiar market picture
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