There is a specific type of warning that is wrapped in academic language that is both dense enough to be skimmed over and technical enough to seem distant, but the underlying message is uncomfortable and sharp. That’s precisely what the IMF’s most recent note on tokenized finance is. It doesn’t quite shout, but it was written by Tobias Adrian, one of the fund’s most senior economists. However, it is not required to.
Speed is the main focus of this paper. It’s the kind of speed that deprives decision-makers of the time they need when things start to go wrong, not the kind that sounds exciting in a fintech pitch deck. Settlement takes place at the end of the day in conventional financial systems.
| Category | Details |
|---|---|
| Organization | International Monetary Fund (IMF) |
| Report Author | Tobias Adrian |
| Author Title | Financial Counselor and Director, Monetary and Capital Markets Department |
| Report Type | IMF Staff Note on Tokenized Finance |
| Publication Year | 2025–2026 |
| Key Warning | Tokenized finance accelerates crisis timelines, reducing intervention windows |
| Stablecoin Market | Annual payments volume hit $390 billion as of December 2025 (McKinsey & Company) |
| TerraUSD Collapse | May 2022 — wiped approximately $45 billion in market cap |
| Estimated Industry Loss | ~$300 billion across digital asset markets post-TerraUSD |
| Concept Highlighted | Synthetic CBDC (sCBDC) as a safer alternative to private stablecoins |
| Core Policy Message | Central banks must define their role: rule setters, infrastructure providers, or direct participants |
| Reference Resource | Bank for International Settlements — Tokenization Research |
Friction is caused by batch processing, reconciliation delays, and clearing house back-and-forth. It turns out that friction can be beneficial at times. It purchases hours. Sometimes only a few hours are needed for regulators to intervene, for liquidity to be located, and for panic to be defused.
A large portion of that friction is removed by tokenized systems. Settlement becomes ongoing. Margin calls are automatically triggered. Demands for liquidity emerge immediately rather than at the conclusion of a trading session. The safeguards that crisis managers have discreetly depended upon for many years start to vanish.
It’s difficult to avoid feeling a little uneasy while listening to Adrian’s argument. He admits that the efficiency gains are genuine. There is clear appeal to atomic settlement, in which delivery and payment occur simultaneously and there is no counterparty risk.
The anxiety of that exposure is familiar to anyone who has witnessed a securities trade sit in limbo for two days. However, the IMF paper argues that removing those delays does more than just increase productivity. It transforms what could have been a slow-motion event into something that moves at machine speed, changing the basic nature of how a crisis develops.
The core of this issue is stablecoins. The paper takes a very strong stance on what stablecoins are and are not. They don’t resemble central bank currency in any meaningful way. Adrian contends that they are more akin to money market funds, which are financial instruments whose stability is solely dependent on the perceived quality of their underlying reserves and the operational ability of issuers to honor redemptions. That distinction is very important.
A run occurs when investors lose faith in a money market fund. The same thing can occur when trust in a stablecoin declines, but it can happen more quickly, worldwide, and without the institutional framework that typically keeps the damage contained.
The most striking example that can be cited is the collapse of TerraUSD in May 2022. Approximately $45 billion in market capitalization disappeared in a few days. What came next was uncontainable. The industry lost an estimated $300 billion in value before the implosion ended, dragging Bitcoin and other assets down with it.
It’s still unclear if the system’s designers actually thought it was stable or if warning indicators were just disregarded in the rush of a bull market. In any case, the result was disastrous, and the IMF obviously sees it as a preview rather than an isolated incident.
There are actual locations where this is already happening in daily life outside of the conference rooms where these policy discussions take place. The most striking example is Argentina. Trust in the peso has been subtly eroded by years of inflation and economic instability. People there are holding stablecoins because dollar-denominated digital tokens have emerged as a more dependable store of value than their own currency, not because they believe in the technology.
This substitution, which is taking place on the streets of Buenos Aires, is exactly the type of erosion of monetary sovereignty that the IMF paper describes as a systemic risk. If enough fragile economies adopt privately issued, foreign-currency-backed tokens, their capacity to implement independent monetary policy starts to deteriorate in ways that are hard to undo.
The idea of a synthetic central bank digital currency, or sCBDC, is an intriguing alternative put forth by the IMF, but its reasoning is also a little shaky. The concept is to combine the innovative potential of the private sector with the fundamental stability of sovereign money by allowing private companies to issue digital tokens that are fully backed by central bank reserves. End users are handled by private businesses; the central bank does not deal with them directly.
However, the public balance sheet—rather than a private reserve portfolio—is the ultimate safety net. Adrian characterizes this type of hybrid architecture as a more functional equivalent to wholesale CBDC. This model might be effective. The paper admits that it might also make it more difficult to distinguish between private and public funds.
Adrian’s note most obviously conveys a sense of time pressure. The final line of the document strikes a chord: “The window for shaping the architecture of the tokenized financial system is open, but it will not remain so indefinitely.”
That’s not boilerplate from the bureaucracy. It reflects a real concern that infrastructure that operates continuously and globally, answering to no single regulator and respecting no specific border, is outpacing regulatory and policy frameworks built around nationally domiciled institutions, territorially bounded rules, and jurisdiction-specific legal authority.
Reading this document gives me the impression that the IMF is more interested in outlining the circumstances that make a crisis more difficult to handle than in forecasting one. Tokenization is not intrinsically risky.
However, despite all of its inefficiencies, traditional finance was better suited to absorb the kind of systemic brittleness that is created by the speed it introduces, the cross-border flows it permits, and the concentration of logic inside unregulated or under-regulated code. Now, the question is whether lawmakers act swiftly and cooperatively enough to construct the barriers before the next stressful situation arises and puts them to the test.