BlackRock, the world's largest asset management company, says tokenization is the most significant market upgrade since the early internet.
Meanwhile, the International Monetary Fund (IMF) describes it as an unstable and untested architecture that can amplify financial shocks at machine speed.
Both institutions focus on the same innovations. But the divergence in their conclusions captures one of the most important debates in modern finance: whether tokenized markets will reinvent the world's infrastructure or reproduce its worst vulnerabilities at a new rate.
Institutional divides around tokenization
In a Dec. 1 editorial in The Economist, BlackRock CEO Larry Fink and COO Rob Goldstein argued that recording asset ownership on a digital ledger represents the next structural step in a decades-long process of modernization.
They framed tokenization as an economic leap comparable to the arrival of SWIFT in 1977 and the transition from paper certificates to electronic transactions.
In contrast, the IMF warned in a recent commentary video that tokenized markets could be prone to flash crashes, liquidity disruptions, and domino cascades of smart contracts that turn local failures into systemic shocks.
The disagreement over tokenization stems from the fact that the two institutions operate under very different missions.
BlackRock, which already has tokenized funds and dominates the spot ETF market for digital assets, is approaching tokenization as an infrastructure strategy. The incentive is to expand global market access, compress settlement cycles to 'T+0' and expand the investable space.
In that context, blockchain-based ledgers look like the next logical step in the evolution of financial plumbing. This means this technology offers a way to eliminate costs and latency in the traditional financial world.
But the IMF works from the opposite direction.
As a stabilizer of the global monetary system, it focuses on the difficult-to-predict feedback loops that occur when markets operate at very high speeds. Traditional finance relies on delayed settlements to ensure net transactions and liquidity.
Tokenization introduces instant payments and composability across smart contracts. Although this structure is efficient during calm periods, shocks can propagate much faster than human intermediaries can react.
These perspectives are not mutually exclusive, as they reflect different layers of responsibility.
BlackRock is on a mission to build the next generation of investment products. The IMF is tasked with identifying faults before they widen. Tokenization sits at the intersection of these tensions.
Technology with two futures
Fink and Goldstein describe tokenization as a bridge “from both sides of the river” connecting traditional institutions and digital-first innovators.
They argue that sharing a digital ledger can eliminate time-consuming manual processes and replace disparate payment pipelines with standardized rails that can be instantly verified by participants across jurisdictions.
Although the data must be carefully analyzed, this view is not theoretical.
According to Token Terminal, the broader tokenization ecosystem is approaching $300 billion, a figure largely supported by dollar-pegged stablecoins like USDT and USDC.
But the real test lies in the roughly $30 billion in regulated real world assets (RWA) such as tokenized U.S. Treasuries, private credit, and bonds.
In fact, these regulated assets are no longer limited to pilot programs.
Tokenized government bond funds such as BlackRock’s BUIDL and Ondo’s products are now live. At the same time, precious metals have also moved on-chain, with a significant amount of digital gold in circulation.
The market is also expanding its investment universe beyond listed bonds and equities, with fragmentation of real estate stocks and tokenized private credit products.
Given this, forecasts for the sector range from the optimistic to the astronomical. Reports from companies such as RedStone Finance predict a “thunder out of the blue” scenario in which on-chain RWA could reach $30 trillion by 2034.
Meanwhile, more conservative estimates from McKinsey & Company suggest that the market could double as funds and government bonds move to blockchain rails.
For BlackRock, even a conservative case would mean rebuilding trillions of dollars of financial infrastructure.
But the IMF sees a similar, less volatile future. His interests center on atomic payment mechanisms.
In today's markets, trades often “offset” at the end of the day, and banks only need to move the difference between what they bought and what they sold. Atomic payments require all trades to be fully funded immediately.
In stress situations, the demand for this pre-funded liquidity can skyrocket, causing liquidity to evaporate just when it is needed most.
If automated contracts trigger liquidations “like dominoes,” localized issues could escalate into a full-scale cascade before regulators receive any warning.
liquidity paradox
Part of the enthusiasm for tokenization stems from the question of where the next market growth cycle will begin.
The last crypto cycle was characterized by memecoin-driven speculation, which generated high activity but depleted liquidity without widening long-term adoption.
Proponents of tokenization argue that the next expansion will not be driven by retail speculation, but by institutional yield strategies such as tokenized private credit, real-world debt instruments, and enterprise-grade vaults that deliver predictable returns.
In this framework, tokenization is not just a technological upgrade, but a new liquidity channel. Institutional allocators facing a constrained traditional yield environment may move to tokenized credit markets where automated strategies and programmable settlements can generate higher and more efficient returns.
However, this future remains elusive as large banks, insurance companies and pension funds face regulatory constraints.
For example, the Basel III Endgame Rules assign punitive capital treatment to certain digital assets classified as “Group 2” and prevent exposure to tokenized products unless regulators clarify the distinction between volatile cryptocurrencies and regulated tokenized securities.
Until its boundaries are defined, the “money wall” remains more potential than reality.
Moreover, the IMF claims that even if the funds arrive, hidden influence exists.
Complex stacks of automated contracts, collateralized debt positions, and tokenized credit products can create recursive dependencies.
During periods of high volatility, these chains can unravel faster than the risk engine is designed to handle. The very features that make tokenization attractive, such as instant payments, composability, and global access, create feedback mechanisms that can amplify stress.
Tokenization question
The discussion between BlackRock and the IMF is not about whether tokenization will be integrated into global markets. It already is.
It's about that trajectory of integration. One path envisions a more efficient, accessible, and globally synchronized market structure. The other predicts a situation where speed and connectivity create new forms of systemic vulnerability.
However, its future outcome will depend on whether global institutions can converge on consistent standards for interoperability, information disclosure, and automated risk management.
