Several experts within the cryptocurrency sector are expressing concerns that digital asset treasury (DAT) firms that are tokenizing their equity on the blockchain could amplify risks for both investors and the companies themselves.
Kadan Stadelmann, Chief Technology Officer at Komodo, a decentralized exchange platform, stated to Cointelegraph: “Unlike conventional financial markets, which operate within set trading hours, blockchain-based trading occurs continuously, 24/7.”
He warned that significant price fluctuations occurring on the blockchain outside of traditional market hours could trigger a rush to sell shares of a treasury company that has issued both tokenized and traditional stock. This could happen before the company has adequate time to react to the sudden price drop.
Stadelmann further noted that smart contract vulnerabilities, such as coding errors or the threat of hacking, could escalate risks. These attacks could jeopardize both the crypto treasury’s underlying assets and the tokenized stocks themselves. Kanny Lee, CEO of the decentralized exchange SecondSwap, added:
“Tokenizing DAT equity creates a derivative built upon a derivative. This leaves investors doubly exposed: first, to the inherent volatility of the treasury’s crypto holdings, and second, to the complexities of corporate equity, governance structures, and securities regulations. This represents a considerable amount of risk piled on top of already unstable assets.”
The popularity of tokenized stocks is increasing, and many companies now have tokenized shares available. The U.S. Securities and Exchange Commission (SEC) is also considering the possibility of 24/7 capital markets. However, due to the current lack of legal clarity, tokenized stocks exist in a regulatory gray area.
The SEC and Stock Exchanges Eye Tokenized Equities and Around-the-Clock Trading
The United States SEC is exploring the adoption of blockchain technology for stock trading. This aims to modernize the existing system, which traditionally pauses during nights, weekends, and holidays, and features extended settlement periods compared to digital asset technology.
SEC officials are evaluating proposals to permit regulated crypto exchanges catering to retail investors to provide tokenized stock trading options within the United States.
Established stock exchanges, including the technology-focused Nasdaq and the New York Stock Exchange (NYSE), are also advocating for longer trading hours to compete with the cryptocurrency markets, which operate without interruption.
Nasdaq revealed intentions in March to offer round-the-clock trading for five days a week, with a target launch date for these extended hours sometime in the latter half of 2026.
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