According to a report by The Block on October 23, PANews reports that the Financial Stability Board (FSB) released a report on Wednesday stating that institutional exploration of tokenization poses little risk to the global financial system, primarily due to the limited adoption of the technology so far. The FSB noted in its report that initiatives such as BlackRock's BUIDL fund are still in their early stages and currently help mitigate potential threats to the financial system.

Although the report indicates that the current risks of the technology are low due to scalability issues, several financial stability vulnerabilities related to DLT-based tokenization were still identified. Key issues include liquidity mismatches, leverage problems, asset quality, interoperability, and operational vulnerabilities. The report warns that if the scale of asset tokenization expands significantly, these risks may intensify, especially if the industry can address interoperability issues and obtain clearer regulatory guidance.

The FSB also expressed skepticism about the advantages of tokenization, believing that existing technologies can usually achieve similar results without the associated risks. The report outlines various barriers that hinder widespread adoption, including unclear investor demand, a lack of interoperability between DLT platforms, and differing legal and regulatory frameworks across jurisdictions. Additionally, the report emphasizes the importance of effective oversight and regulatory measures. It points out that if these vulnerabilities are not adequately addressed, they may pose risks to financial stability as the adoption of tokenization increases.