The tokenized stock market is worth about $2.3 billion highlighting the gap between growing institutional interest in on-chain securities and the market’s limited scale, according to the International Monetary Fund (IMF).

The market remains concentrated, with Ondo Finance and Backed Finance’s xStocks accounting for more than 70% of its value. Despite the growing interest, tokenized equities remain significantly less liquid and more volatile than their traditional counterparts, the IMF found.

The IMF’s analysis found that more than 50% of tokenized stock trading takes place outside regular U.S. market hours while about 80% of trades involve less than one full share. The figures point to demand for fractional ownership and round-the-clock access but do not yet indicate a market operating at the scale of traditional equity exchanges.

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Tokenized equities were approximately 1.5 times more volatile than the underlying stocks. The IMF also found that traditional markets absorbed between 87% and 99% of overnight price movements in tokenized equities when U.S. trading resumed, suggesting that on-chain prices carry information relevant to conventional markets.

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The findings come as established financial firms and crypto platforms expand their tokenization initiatives, betting that blockchain infrastructure can enable continuous trading and more efficient settlement.

However, the IMF said the market’s early stage and limited liquidity warrant caution. It urged regulators to consider safeguards such as circuit breakers for round-the-clock trading and closer monitoring of links between tokenized securities and traditional financial markets.

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