According to several executives within the crypto industry, digital asset treasury (DAT) companies that tokenize their shares on the blockchain are increasing risks for both investors and their businesses.
Kadan Stadelmann, CTO of the Komodo decentralized exchange platform, mentioned to Cointelegraph, “Blockchains trade 24/7, whereas traditional markets have specific hours of operation.”
Price fluctuations that take place outside the hours of traditional markets may trigger a rush to sell shares of a treasury company that has issued both tokenized and traditional stock, leaving the company without enough time to manage a price drop.
Stadelmann further noted that risks from smart contracts due to code vulnerabilities or potential hacking of both the underlying assets held by the crypto treasury and the tokenized shares can amplify those risks. Kanny Lee, CEO of decentralized exchange SecondSwap, stated:
“Tokenizing DAT equity creates a synthetic on top of a synthetic. Investors end up exposed twice, once to the volatility of the treasury’s crypto and again to the complexity of corporate equity, governance, and securities law. That’s a lot of risk layered onto already volatile assets.”
Tokenized stocks are gaining traction as numerous companies have now issued tokenized shares, while the U.S. Securities and Exchange Commission (SEC) is hinting at 24/7 capital markets. Nevertheless, the ambiguity surrounding legal regulations leaves tokenized stocks in a regulatory grey area.
Related: SEC’s tokenized stock push has unclear benefits for crypto: Dragonfly Exec
SEC and Stock Exchanges Advocate for Tokenized Equities and Continuous Trading
The U.S. SEC is looking into blockchain-based stock trading to modernize the outdated trading system, which typically takes nights, weekends, and holidays off and has longer settlement times compared to digital asset technology.
SEC officials are considering allowing regulated retail crypto exchanges to facilitate tokenized stock trading for consumers in the United States.
Traditional exchanges, such as Nasdaq and the New York Stock Exchange (NYSE), are also advocating for extended trading hours to keep pace with the constantly trading crypto markets.
In March, Nasdaq unveiled plans for 24-hour trading, five days a week, with an aim for implementation in the latter half of 2026.
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