According to a report by The Block on October 23, PANews reported that the Financial Stability Board (FSB) released a report on Wednesday stating that the risks posed by institutional financial exploration of tokenization to the global financial system are minimal, mainly due to the limited adoption of the technology thus far. The FSB noted in the report that initiatives such as BlackRock's BUIDL fund are still in the early stages and currently help mitigate potential threats facing 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 have been identified. Key issues include liquidity mismatches, leverage problems, asset quality, interoperability, and operational fragility. The report warns that if the scale of asset tokenization significantly expands, these risks could intensify, especially if the industry can resolve interoperability issues and obtain clearer regulatory guidance.

The FSB has expressed skepticism about the advantages of tokenization, believing that existing technologies can often achieve similar results without the associated risks. The report outlines various obstacles hindering widespread adoption, including unclear investor demand, a lack of interoperability between DLT platforms, and differing legal and regulatory frameworks across jurisdictions. Furthermore, the report emphasizes the importance of effective oversight and regulatory measures. It notes that if these vulnerabilities are not adequately addressed, they could pose financial stability risks as the adoption of tokenization increases.