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Traditional stocks absorbed 87% to 99% of the overnight tokenization price changes at the opening, but tokenized stocks have about 1.5 times the volatility of the former, and also have poorer liquidity.

IMF indicates that the current systemic risks are still limited, and urges regulatory authorities to consider implementing a circuit breaker mechanism for 24/7 trading.

The tokenized stock market may not be large in scale, but its traders do not follow the working hours of Wall Street.

Its disadvantages are also evident. The volatility of tokenized stocks is approximately 1.5 times that of the underlying stocks, and liquidity is much worse, especially on decentralized exchanges, where prices deviate even more from those of traditional markets.

The market size is also very small and highly concentrated: it is approximately $2.3 billion, with Ondo Finance and Backed Finance together accounting for over 70% of the total. According to IMF, both companies issue synthetic tokens that provide price exposure but do not directly grant ownership of stocks.

IMF indicates that, given that the market is still in its early stages, the research findings should be 'interpreted with caution', and it is stated that systemic risks are still limited at present. IMF urges regulatory authorities to consider implementing circuit breakers for 24/7 trading and to monitor more closely its connections with traditional markets. Earlier this year, IMF warned that tokenized finance and stablecoins could amplify financial crises.

At the time of this report's release, large American institutions are accelerating their entry into the tokenization sector.

The New York Stock Exchange plans to reach out to crypto investors through Blockchain.com, while the parent company of NYSE, ICE, is collaborating with OKX to advance 24/7 tokenized stock trading under the new innovative exemption framework of the U.S. Securities and Exchange Commission.