{
  "title": "Optimal Policy for Financial Market Tokenization",
  "publication": "IMF Working Papers, September 19, 2025",
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  "summary": "Competing broker initiatives to “tokenize” financial assets—i.e., represent them on programmable platforms—promise efficiency gains but raise concerns about market fragmentation. Policymakers in several countries are considering supporting such platforms or mandating their interoperability.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Topic: Analysis of competing broker initiatives to \"tokenize\" financial assets—i.e., represent them on programmable platforms.\n- Objective: Provide the first formal framework for analyzing optimal policy toward tokenized financial market platforms and their interoperability.\n- Setting: Brokers with heterogeneous market power compete to attract investors and execute trades intra-broker or on a legacy platform; coalitions of brokers can invest in creating a tokenized market with faster, cheaper inter-broker settlement."
    },
    {
      "heading": "Analytical framework",
      "content": "- Model elements:\n  - Brokers differ in market power and choose whether to join coalitions to create a tokenized market.\n  - Trades can be executed intra-broker, on a legacy platform, or on a tokenized market created by a coalition.\n  - Investment by coalitions lowers inter-broker settlement costs and speeds settlement.\n- Equilibrium considerations:\n  - Partial coalitions can divert trades away from excluded competitors.\n  - Equilibrium coalition structures can generate outcomes with either excessive investment or insufficient tokenization relative to the social optimum."
    },
    {
      "heading": "Main findings",
      "content": "- Market structure effects:\n  - Partial coalition formation leads to trade diversion from excluded brokers, shaping coalition incentives and equilibrium outcomes.\n  - Heterogeneity in broker market power is central to coalition formation and investment levels.\n- Policy sufficiency:\n  - Public-private cost-sharing alone is not sufficient to achieve the social optimum.\n  - Interoperability mandates alone are not sufficient to achieve the social optimum.\n  - The combination of public-private cost-sharing and interoperability mandates can achieve the social optimum.\n- Robustness:\n  - The results hold when incorporating an open-access ledger (e.g., a public blockchain)."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Policy instruments should be combined:\n  - Use a combination of public-private cost-sharing and interoperability mandates to attain socially optimal tokenization outcomes.\n- Caution on partial support:\n  - Policymakers should be wary of supporting partial coalitions or unilateral broker initiatives without ensuring interoperability, as these can produce excessive or insufficient investment and undesirable market fragmentation.\n- Consideration of ledger architecture:\n  - Policies remain pertinent when an open-access ledger (public blockchain) is part of the architecture; interoperability and cost-sharing remain key levers."
    },
    {
      "heading": "Key descriptors and metadata (as presented in the source)",
      "content": "- Authors: Itai Agur, Alexander Copestake\n- Publication date: September 19, 2025\n- Series: IMF Working Paper No. 2025/185\n- Pages: 58\n- DOI: https://doi.org/10.5089/9798229026505.001\n- ISBN: 9798229026505\n- ISSN: 1018-5941\n- Subjects/Keywords: asset tokenization, Blockchain and DLT, Coalition formation., coalitions of broker, Competition, Intermediation, Interoperability, interoperability mandate, Tokenization, tokenization partnership, tokenized market, tokenized market formation, trades intra-broker, Trading platforms\n\nSource: \"Optimal Policy for Financial Market Tokenization\" by Itai Agur and Alexander Copestake, IMF Working Papers 2025, 185 (September 19, 2025); DOI: https://doi.org/10.5089/9798229026505.001.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2025/09/19/optimal-policy-for-financial-market-tokenization-570540"
    }
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    "Authors: Itai Agur, Alexander Copestake",
    "Published: September 19, 2025",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229026505.001",
    "Topic: Analysis of competing broker initiatives to \"tokenize\" financial assets—i.e., represent them on programmable platforms.",
    "Objective: Provide the first formal framework for analyzing optimal policy toward tokenized financial market platforms and their interoperability.",
    "Setting: Brokers with heterogeneous market power compete to attract investors and execute trades intra-broker or on a legacy platform; coalitions of brokers can invest in creating a tokenized market with faster, cheaper inter-broker settlement.",
    "Model elements:",
    "Equilibrium considerations:",
    "Market structure effects:",
    "Policy sufficiency:",
    "Robustness:",
    "Policy instruments should be combined:",
    "Caution on partial support:",
    "Consideration of ledger architecture:",
    "Authors: Itai Agur, Alexander Copestake",
    "Publication date: September 19, 2025",
    "Series: IMF Working Paper No. 2025/185",
    "Pages: 58",
    "DOI: https://doi.org/10.5089/9798229026505.001",
    "ISBN: 9798229026505",
    "ISSN: 1018-5941",
    "Subjects/Keywords: asset tokenization, Blockchain and DLT, Coalition formation., coalitions of broker, Competition, Intermediation, Interoperability, interoperability mandate, Tokenization, tokenization partnership, tokenized market, tokenized market formation, trades intra-broker, Trading platforms",
    "**Working Paper**"
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