More than half of tokenized equity trading happens outside regular U.S. market hours, according to the International Monetary Fund's Global Financial Stability Report. About 80% of trades involve less than a full share, indicating strong retail demand for fractional ownership of tokenized stocks.
Tokenized stocks are blockchain-based tokens that track shares of publicly traded companies. The IMF studied 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 research suggests onchain prices carry meaningful market information. When traditional markets reopened, conventional shares absorbed 87% to 99% of the overnight price moves their tokenized counterparts had made.
However, significant drawbacks emerged from the analysis. Tokenized equities were roughly 1.5 times more volatile than underlying stocks and substantially less liquid, particularly on decentralized exchanges, where prices diverged further from traditional markets.
The market remains small and concentrated, valued at approximately $2.3 billion. Ondo Finance and Backed Finance's xStocks account for more than 70% of the market. Both issue synthetic tokens that provide price exposure without direct share ownership.
The IMF cautioned that its findings should be interpreted with caution given the market's early stage, and stated that systemic risks remain limited for now. The fund urged regulators to consider implementing circuit breakers for 24/7 trading and to monitor connections to traditional markets more closely.
Major U.S. financial institutions are entering the tokenization space. The NYSE plans to reach crypto investors through Blockchain.com, and NYSE owner ICE is collaborating with OKX on 24/7 tokenized stock trading under the SEC's innovation exemption. Securitize has brought tokenized stocks including Nvidia, Apple, and Amazon shares to Solana, with expansion to additional blockchain networks planned. Cboe has partnered on tokenized options based on S&P indices, and Coinbase launched tokenized stocks for non-U.S. users on Base in August.
