IMF Finds Most Tokenized Stock Trading Happens Outside US Market Hours
Tokenized stocks are attracting traders beyond traditional Wall Street hours, with more than half of all trading activity taking place when U.S. stock markets are closed, according to a new report from the International Monetary Fund (IMF).
Around 80% of trades involve less than one full share, highlighting demand for fractional ownership among retail investors. The findings point to the potential appeal of blockchain-based equities, which allow investors to gain exposure to publicly traded companies without following conventional market schedules.
The IMF examined five of the most liquid tokenized U.S. equities across 11 trading platforms over a 365-day period. The assets included tokens tracking Tesla, Nvidia and the S&P 500. Tokenized stocks use blockchain technology to represent or track the price of traditional financial assets.
The study also found that tokenized equity markets can provide useful price signals for traditional investors. When U.S. markets reopened, conventional shares reflected between 87% and 99% of the overnight price movements recorded by their tokenized counterparts. This suggests that trading activity outside regular hours can capture information that later influences prices on traditional exchanges.
However, the report identified several risks. Tokenized equities were approximately 1.5 times more volatile than their underlying stocks and had significantly lower liquidity. The differences were particularly noticeable on decentralized exchanges, where token prices sometimes moved further away from those in traditional markets.
Tokenized Stock Market Remains Small
Despite growing interest, the tokenized stock market remains relatively small, with an estimated value of $2.3 billion. Ondo Finance and Backed Finance's xStocks account for more than 70% of the market, according to the IMF.
Both platforms offer synthetic tokens that provide price exposure to underlying assets without giving holders direct ownership of the corresponding company shares. This distinction can affect investors' rights and the protections available to them compared with conventional stockholders.
The IMF cautioned that its findings should be treated carefully because tokenized equities remain at an early stage of development. It also said the sector currently poses limited systemic risk to the wider financial system.
Nevertheless, the organization called on regulators to examine the growing links between blockchain-based markets and traditional finance. Potential measures include circuit breakers designed for continuous trading and closer monitoring of connections between tokenized assets and conventional markets.
The IMF has previously warned that the expansion of tokenized finance and stablecoins could increase financial vulnerabilities. Tobias Adrian, the IMF's financial counsellor and director of its monetary and capital markets department, described tokenization as a structural reallocation of trust within the financial system.
Traditional markets rely on mechanisms such as end-of-day settlement and batch processing, which can provide time to identify and respond to financial stress. Around-the-clock blockchain markets may reduce those delays, potentially allowing problems to spread more quickly.
Major Financial Firms Expand Tokenized Assets
Financial institutions and crypto companies are already developing new ways to bring tokenized equities to investors.
The New York Stock Exchange plans to reach crypto users through Blockchain.com, while its parent company, Intercontinental Exchange (ICE), is working with OKX on round-the-clock tokenized stock trading under a new SEC innovation exemption.
Securitize has also introduced tokenized stocks, including exposure to Nvidia, Apple and Amazon, on the Solana blockchain, with additional networks planned. Meanwhile, Cboe has reached an agreement with S&P to support tokenized options, and Coinbase launched tokenized stocks for users outside the United States on its Base network in August.
These developments point to growing interest in combining traditional financial assets with blockchain infrastructure. However, the IMF's findings highlight the challenges that remain, including price volatility, limited liquidity and regulatory oversight.
As tokenized equity trading expands beyond conventional market hours, regulators and financial institutions will face the task of supporting continuous access while managing the risks that come with connecting blockchain markets to the broader financial system.