Tokenization Doesn’t Threaten Financial Stability

International organizations agree that tokenization, at its current stage of development, doesn’t pose a threat to financial stability. It carries the same risks as TradFi, which can be prevented by strengthening transaction monitoring of tokenized assets and the overall regulation of the sector.

The Bank for International Settlements (BIS) and the Financial Stability Board (FSB) both issued reports on tokenization technology. These regulatory reports will be considered at the G20 Finance Ministers’ and Central Bank Governors’ Meeting on 24 October in Washington.

Both reports highlight the potential benefits of tokenization, emphasizing that it carries risks similar to traditional financial systems. In particular, the BIS analysts noted that asset tokenization is still rare and the technology remains underexplored. However, its use comes with liquidity issues, credit and operational risks, and fraud threats. The FSB report concluded that despite these risks, tokenization doesn’t pose significant threats to financial stability but requires further monitoring.

The BIS analysts also noted that tokenization could improve the security and efficiency of financial systems. In turn, the FSB researchers recommended that central banks more actively explore regulatory approaches and expand international cooperation.

Last year’s meeting of G20 finance ministers and central bank governors raised the issue of developing global standards for crypto market regulation, with the BIS analysts insisting on the early launch of the CBDC. The issue of overseeing tokenization technology arose this year as the RWA market surpassed $12 billion and could grow fiftyfold in the next six years.

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