Tokenization consists of representing claims on assets, real or financial, in a ledger. Being a very incipient DFS, jurisdictions that have attempted sandbox- or pilot-texting it were faced with some challenges, such as high investment needs and several risks (cyber, legal, settlement and liquidity, among others). Tokenization is mostly done on decentralized ledgers, but centralized ones could, in theory, enable such process. Its most publicized advantage is to allow for simplified, onchain fractional ownership of assets, which could reduce initial disbursement for some investments, making them more liquid and accessible. Tokenization can also enhance financial inclusion by reducing transaction costs, increasing transparency, and enabling broader access to financial markets through programmable and decentralized infrastructures1.
Tokenization can play an important role in making credit reach Micro, Small and Medium Enterprises (MSMEs). Lack of collateral and information asymmetries hinder small entrepreneurs from receiving credit from banks: it is estimated that the finance gap for formal and informal MSMEs reaches USD 8 trillion2. Tokenization could be useful in tackling the information asymmetries, eg by easing banks’ access to delinquency records and MSME financial health; also, the tokenization of real assets owned by MSMEs could favor their use as collateral, thereby stimulating and improving lenders’ offering of MSME credit products and monitoring of loan development.
Authorities should be vigilant to ensure network effects proliferate positively in the tokenized sphere. If critical mass is reached among both issuers and users, and should authorities implement policy in a way that tokenization ledgers are either unique or interoperable, more agents on both sides of the market will have an incentive to join, thus positively influencing market liquidity. Poor ledger interoperability, lack of trust on risk management or excessive rents extracted by unchecked private ledger operators can have the opposite effect, reducing available liquidity and damaging competition.
1. Agur, I., G. Villegas Bauer and T. Mancini-Griffoli (2025), “Tokenization and Financial Market Inefficiencies”, IMF Fintech Notes, No. 2025:001, IMF, Washington, DC, https://doi.org/10.5089/9798400298905.063.
2. International Finance Corporation (2025), MSMEs, https://www.ifc.org/content/dam/ifc/doc/2025/msme-s-factsheet-ifc-financial-institutions-group.pdf?cid=IFC_LI_IFC_EN_EXT (accessed on 26 August 2025).
