Blockchain research: IMF finds tokenized stocks active but illiquid

The news

The International Monetary Fund’s latest Global Financial Stability Report includes a study of tokenized equities, and its findings are mixed. More than half of tokenized stock trading takes place outside regular U.S. market hours, and about 80% of trades involve less than one full share, which points to demand for fractional ownership among retail investors.

The IMF examined the five most liquid tokenized U.S. equities, including tokens that track Tesla, Nvidia and the S&P 500, across 11 trading venues over 365 days. When U.S. markets reopened, traditional shares absorbed 87% to 99% of the overnight price moves made by their tokenized counterparts, which suggests onchain prices carry real information. But tokenized equities were roughly 1.5 times as volatile as the underlying stocks and much less liquid, especially on decentralized exchanges, where prices strayed further from traditional markets.

The market is small and concentrated. It is worth about $2.3 billion, and Ondo Finance and Backed Finance’s xStocks account for more than 70% of it. The IMF notes that both issue synthetic tokens that give price exposure without direct share ownership. The Fund said the findings “should be interpreted with caution,” that systemic risks remain limited for now, and that regulators should consider circuit breakers for 24/7 trading and watch links to traditional markets more closely.

Our analysis

The data support two readings that can both be true. Tokens carry price discovery: if traditional stocks absorb nearly all of an overnight move at the open, the tokens were pricing in information, not noise. That is the case for round-the-clock trading, which lets investors react to news when the exchange is closed.

The cost shows up in market quality. A token that is 1.5 times as volatile as its underlying stock and trades thinly can swing hard on small orders, and on-chain venues without deep liquidity let prices drift from the reference. The fact that 80% of trades are under one share means volume is made of many small retail orders, which is useful for access but does little to build depth.

Concentration is the other structural feature. If Ondo and xStocks hold more than 70% of a $2.3 billion market, more than $1.6 billion sits with two issuers, so conclusions about tokenized stocks are largely conclusions about those two products.

The synthetic structure matters too. A holder of an Ondo or xStocks token has price exposure without direct share ownership. For anyone doing blockchain research on these products, that makes issuer terms, reserves and redemption mechanics the key diligence items, more than the token’s chart.

Institutions are moving anyway. The NYSE plans to reach crypto investors through Blockchain.com, and its owner ICE 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, Cboe has struck an S&P deal for tokenized options, and Coinbase launched tokenized stocks for non-U.S. users on Base in August.

Room for disagreement

The IMF itself says its findings should be read with caution given the market’s early stage, and the sample is small: five tokens, one year, and a $2.3 billion market. Proponents argue that thin liquidity and volatility are early-stage features that will ease as market makers and institutional venues arrive. Others argue the opposite, that 24/7 trading in assets with thin books creates risks that circuit breakers can only partly contain, and that synthetic tokens blur the line between a stock and a derivative.

What to watch

Watch for regulator responses to the circuit-breaker suggestion, how the SEC’s innovation exemption is used by ICE and OKX, and whether liquidity improves as larger firms launch. Also watch whether issuers move from synthetic tokens toward structures that confer direct share ownership.