IMF Warns Tokenization Risks Shifting Power From Banks to Unregulated Code
The IMF just dropped a bombshell: tokenization, the engine of crypto, could strip risk from banks and hand it to code regulators can't touch. Wall Street is racing to move trillions on-chain, but the IMF warns this new plumbing might crack under pressure.
The IMF is sounding the alarm: tokenization, the tech powering crypto, could siphon risk away from traditional banks and dump it into lines of code that operate beyond regulatory reach. This comes as giants like BlackRock are pushing trillions onto blockchains. The IMF fears this new financial plumbing could buckle when stress hits. Tokenization eliminates the built-in delays of traditional finance, which act as safety brakes during crises. Instant settlement via smart contracts means glitches or runs can spread like wildfire before anyone can react. The danger, the IMF warns, shifts from institutions to the platforms and code themselves, demanding oversight extend to the code. Some smart contracts could become too central to fail, echoing the 'too big to fail' crisis that triggered the 2008 bailouts, with ownership of tokenized assets still legally murky.