The International Monetary Fund’s latest Global Financial Stability Report indicates that more than 50% of tokenized stock trading takes place outside regular U.S. market hours. Approximately 80% of these trades involve less than one full share, reflecting strong retail demand for fractional ownership. The study analyzed the five most liquid tokenized U.S. equities, including those tracking Tesla, Nvidia, and the S&P 500, across 11 venues over a 365-day period.
While on-chain prices carry real information—with traditional stocks absorbing 87% to 99% of overnight price moves at the open—tokenized equities were found to be about 1.5 times more volatile and significantly less liquid than their underlying assets. This illiquidity was particularly pronounced on decentralized exchanges. The total market value stands at approximately $2.3 billion, with Ondo Finance and Backed Finance’s xStocks accounting for more than 70% of this volume. These issuers provide synthetic tokens offering price exposure without direct share ownership.
The data reveals a structural disconnect between the utility of tokenized stocks and their current market maturity. While the high volume of off-hours trading and fractional purchases demonstrates genuine consumer interest in accessibility, the elevated volatility and poor liquidity suggest the infrastructure is not yet robust enough to serve as a reliable substitute for traditional equity markets. The fact that traditional shares absorb nearly all overnight price movements indicates that tokenized assets are currently derivative instruments rather than independent price discoverers, limiting their systemic relevance despite their growing user base.
Regulatory attention is likely to intensify as major financial institutions accelerate entry into this space. With entities like NYSE, ICE, Coinbase, and Securitize expanding offerings under new exemptions, the concentration risk posed by a few dominant issuers holding over 70% of the market becomes a critical compliance concern. The IMF’s call for circuit breakers highlights the potential for operational risks in 24/7 trading environments, where automated mechanisms may fail to manage the amplified volatility observed in decentralized venues.
