Crypto Executives Warn of Risks in Tokenizing Company Stocks
Leaders in the crypto industry highlight the potential hazards for investors as companies begin to tokenize their shares.
Digital asset treasury (DAT) companies that tokenize their stocks on the blockchain compound the risks to investors and their own businesses, according to several crypto industry executives.
“Blockchains trade 24/7, whereas traditional markets have specific hours of operation”
Kadan Stadelmann, CTO of Komodo, revealed.
“This leads to potential stock runs in treasury companies that issue both tokenized and traditional shares, without enough time to react to sudden price drops.”
Digital Assets Value
Tokenized stocks have crossed $1.3 billion in value. Source: RWA.XYZ
Furthermore, smart contract risks and potential hacking threats could further heighten exposure for crypto treasury firms. Kanny Lee, CEO of SecondSwap commented:
“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 multiple companies adopt this model, while the SEC hints at 24/7 capital markets. However, the ambiguity in legal frameworks places tokenized stocks in a regulatory grey zone.
SEC and Stock Exchanges Advocate for Round-the-Clock Trading
The SEC is currently exploring blockchain-based stock trading, aiming to modernize the outdated trading system which operates only during specific hours with long settlement times.
SEC officials are considering allowing regulated crypto exchanges to offer tokenized stock trading to US customers. Traditional stock markets like Nasdaq and the NYSE are also advocating for expanded trading hours to match the non-stop trading pace of the crypto markets.
Tal Cohen Announces Plans
Tal Cohen of Nasdaq discusses plans for 24-hour stock trading. Source: LinkedIn
Nasdaq revealed efforts to introduce 24-hour trading, five days a week by targeting a launch in the second half of 2026.
Related: Will Robinhood’s tokenized stocks REALLY take over the world? Pros and cons and The SEC’s tokenized stock push has unclear benefits for crypto
