Tokenized stocks, which are blockchain-based tokens representing shares of publicly traded companies, are gaining traction but remain volatile and illiquid, according to the International Monetary Fund’s latest Global Financial Stability Report.
The IMF found that over half of tokenized equity trading occurs outside regular U.S. market hours, with about 80% of trades involving fractional shares. This indicates strong demand for fractional ownership among retail investors. The study examined the five most liquid tokenized U.S. equities, including tokens tracking Tesla, Nvidia, and the S&P 500, across 11 trading venues over 365 days.
The data suggests that onchain prices carry real information, as traditional shares absorbed 87% to 99% of the overnight price moves made by their tokenized counterparts. However, tokenized equities were roughly 1.5 times more volatile than the underlying stocks and far less liquid, especially on decentralized exchanges.
The market for tokenized stocks is small and concentrated, worth about $2.3 billion, with Ondo Finance and Backed Finance’s xStocks accounting for more than 70% of it. Both issue synthetic tokens that offer price exposure without direct share ownership. The IMF urged regulators to consider circuit breakers for 24/7 trading and to monitor links to traditional markets more closely.
The report comes as major U.S. players, including the NYSE, Securitize, and Coinbase, are expanding into the tokenization space. The NYSE plans to reach crypto investors through Blockchain.com, while Securitize has brought tokenized stocks of companies like Nvidia, Apple, and Amazon to Solana.