IMF Warns Tokenized Finance, Stablecoins Could Amplify Financial Crises

Tokenization moves settlement to machine speed, outpacing the tools regulators use today, the International Monetary Fund said.

In brief

• The IMF called tokenization a "structural reallocation of trust" in finance.
• Governments should anchor tokenized settlement in safe assets, the report argued.
• The report carries weight but lacks a comparative baseline, Decrypt was told.

The International Monetary Fund has warned that stablecoins resemble money market funds more than actual money and could face confidence-driven runs as tokenized finance scales.

Tokenization “constitutes a structural reallocation of trust within the financial system,” Tobias Adrian, financial counsellor and director of the monetary and capital markets unit of the IMF, wrote in the report.

Traditional financial systems rely on delays like end-of-day settlement and batch processing that give regulators time to intervene before problems spread, Adrian explained. Tokenization eliminates those delays by making settlement continuous and automated, meaning liquidity crises could materialize instantly.

This creates what the report calls a mismatch between tokenized systems operating across borders at machine speed and crisis management frameworks built around national jurisdictions.

Key levers of control in tokenized finance may lie in code and governance keys rather than in institutions regulators can reach, the IMF argued.

Adrian outlined a five-pillar policy roadmap calling on governments to anchor tokenized settlement in safe assets like wholesale central bank digital currencies, apply consistent regulation across similar activities, and adapt central bank liquidity tools to operate automated environments.

The note also argued that legal mandates for financial stability "must ultimately prevail over automated execution," recommending mandatory audits and override mechanisms for systemically important smart contracts that would allow pauses under emergency conditions.

The note is the latest in a series of escalating warnings from the IMF on digital assets, going as far back as calling private cryptocurrencies an "inadvisable shortcut" to financial inclusion, a joint roadmap with the Financial Stability Board to address risks crypto poses to financial stability, and most recently in late 2025, warning that stablecoin adoption could stifle central bank control.

Correcting the narrative

Observers in conversation with Decrypt said the report's assessment carries weight, though gaps remain.

"By treating the current system as an implicit safe baseline and highlighting only tokenization's incremental risks, the report can leave policymakers with the impression that the status quo is safe," Siwon Huh, a researcher at crypto research firm Four Pillars, told Decrypt.

The report's weakness is that it lacks a comparative baseline against the risks already embedded in traditional finance, Huh explained. Standard settlement delays and opaque OTC derivatives carry their own systemic vulnerabilities, he added.

Major stablecoins like USDT and USDC hold reserves composed of Treasuries, reverse repos, and cash, making them "essentially identical" to a prime money market fund minus the regulatory safeguards, Huh said.

Still, the IMF's comparison serves as "an important corrective to the industry narrative that stablecoins are money," he argued.

"Stablecoins aren't trying to be central bank money," Alan Qureshi, CEO and co-founder of financial technology firm Black Lake, told Decrypt. "On the investor side, they provide curated access to high-quality liquid assets as a store of value. On the issuer and bank side, they function as a liquidity mechanism."

Regulated stablecoins backed by high-quality assets act as localized liquidity pools that distribute collateral across the system, Qureshi explained.

While cross-border resolution gaps and the speed-versus-intervention tradeoff are legitimate concerns, the risks amount to a "feature, not a bug" of a system designed to move faster than traditional finance, he added.

Neil Staunton, CEO and co-founder of fintech firm Superset, largely agreed with the report’s framing, but warned its caution could backfire.

"The real risk is that policymakers read these warnings, get spooked, and slow down the very infrastructure buildout that would deliver the stability outcome the report calls for," Staunton told Decrypt.

Tokenized systems swap slow settlement for cryptographic safeguards like smart contracts and real-time verification, which are "different tools, not weaker ones," Staunton said. Exchanges like the NYSE and Nasdaq are already building the coordinated infrastructure the IMF calls for, he noted.

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