Don't want to trade it yourself?
Our desk runs DEX portfolios on profit share.
An Aug. 19 White House meeting involving at least six crypto and prediction-market firms has brought institutional settlement into focus as Lynq CEO Jerald David warns that regulation cannot make cash and collateral move around the clock.
Lynq CEO Jerald David told crypto.news that clearer rules would remove only one barrier facing financial institutions as digital assets, tokenized securities, and traditional markets become more closely connected.
Once an institution completes a trade, it must still fund the position, deliver cash, and move any required collateral. According to David, each step becomes more difficult when firms use several exchanges, counterparties, and forms of money across markets that remain open overnight and through weekends.
“I think regulation is obviously a big part of the conversation, but for institutions there is a very practical layer underneath it,” David said.
The comments come before a reported White House meeting involving crypto companies, prediction-market operators, regulators, and traditional financial firms. As previously reported in August, Coinbase, Ripple, a16z, Chainlink, Paradigm, and Kalshi are among the expected participants.
President Donald Trump, SEC Chair Paul Atkins, and CFTC Chair Michael Selig may also participate, according to people familiar with the plans. Neither the White House nor the regulators had published a formal participant list or detailed agenda when the meeting was reported.
Crypto regulation leaves an operational problem unresolved
Washington’s attention has centered on rules governing issuers, trading platforms, and the agencies responsible for supervising digital assets. David said institutions face another problem beneath the legal framework because funding and settlement systems do not always follow the hours kept by crypto markets.
“Once you make a trade, you still have to fund it, move collateral and settle it. That sounds straightforward, but it gets much harder when you are dealing with multiple venues, counterparties and different forms of money, especially in markets that trade around the clock.”
Crypto exchanges commonly remain open 24 hours a day, including weekends and public holidays. Many banking and securities systems, however, rely on business-day schedules, cutoff times, and separate settlement processes.
According to David, the difference can leave an institution able to enter a trade while lacking immediate access to the cash or collateral needed to complete it. Firms may respond by keeping funds at several venues, although doing so can leave capital unused and increase exposure to individual counterparties.
At the same time, different forms of digital money are entering institutional markets. Stablecoins, tokenized bank deposits, tokenized money-market funds, and conventional bank balances can perform separate roles, but David said institutions need systems that let value move between counterparties when a payment or margin call becomes due.
US rules are progressing faster than settlement systems
The US Treasury added another part of the regulatory framework on Aug. 17 by proposing rules for Section 3 of the GENIUS Act. The proposal would define when a payment stablecoin is issued in the United States and when a digital asset company offers or sells one to a US customer.
Under the proposal, companies would generally need an appropriate federal or state license to issue payment stablecoins in the country from Jan. 18, 2027. From July 18, 2028, digital asset service providers would generally be barred from offering payment stablecoins to US customers unless a licensed issuer issued them.
The department has opened a 60-day public comment period after publication in the Federal Register. A recent Treasury rules report covered how the definitions would also affect foreign issuers and platforms making their tokens available in the United States.
Treasury’s proposal addresses who may issue and distribute payment stablecoins, but it does not create a common settlement network connecting every bank, exchange, broker, and custodian. David’s comments concern that separate operational layer, including the movement of money between regulated entities after a transaction has been agreed.
Federal Reserve infrastructure shows how operating schedules can differ. FedNow processes instant payments continuously for participating financial institutions, while Fedwire handles large-value bank transfers during defined operating windows.
The Federal Reserve says Fedwire currently runs for 22 hours per business day from Monday through Friday, excluding designated holidays. An expansion planned for 2028 or later will add Sundays and weekday holidays, but the service will continue to close for two hours each operating day and will not operate on Saturdays.
Tokenized markets increase demand for 24/7 collateral
Continuous settlement has become more important as US regulators consider allowing more traditional assets to trade on blockchain networks. An Aug. 17 report on the SEC’s tokenized trading plans said the agency was preparing a limited route through which qualified platforms could test round-the-clock trading in tokenized US stocks.
No final exemption, eligibility standard, or launch date has been announced. SEC officials have also maintained that putting shares on a blockchain does not remove them from federal securities laws or existing investor-protection requirements.
For settlement providers, extending trading hours creates a related demand for cash and collateral outside the normal business day. DTCC said in May that financial firms commonly maintain excess collateral and liquidity buffers because assets may not be available exactly when they are needed.
According to DTCC, tokenized collateral could allow firms to mobilize assets on demand instead of placing extra funds at several locations in advance. The market infrastructure provider has also worked with Chainlink on a system designed to support round-the-clock collateral management across traditional markets and blockchain networks.
A separate project involving BMO, CME Group, and Google Cloud shows how banks are approaching the same issue. As covered in March, BMO planned to let institutional clients convert US dollars into tokenized cash for derivatives, margin, and continuous settlement.
The full BMO service was scheduled for the second half of 2026, subject to regulatory approval. CME said the arrangement could let clients move tokenized cash for margin and collateral purposes without waiting for ordinary banking windows.
Pre-positioned liquidity carries costs and risks
David said mismatched operating hours can force institutions to place liquidity at every exchange or counterparty they expect to use. Money held in several locations may be unavailable for another trade, while direct exposure to a venue can increase if the institution must fund an account before executing transactions.
“So even if the regulatory framework becomes clearer, you still have this mismatch between how the market trades and how capital actually moves,” he said.
Lynq operates a private institutional network through tZERO Securities, an SEC-registered broker-dealer. According to the company, participants can make real-time transfers within the network, while client investments are maintained in segregated accounts and users complete know-your-customer and anti-money-laundering checks.
The company said in February that assets held through its platform had passed $89 million and that it worked with more than 30 institutional digital asset firms, including exchanges, custodians, market makers, and over-the-counter trading desks.
Lynq also introduced a collateral-lock feature in March that allows users to designate assets as collateral without transferring them away from the network, according to the company. The feature prevents pledged assets from being used twice while allowing institutions to release and redeploy them after the related obligation ends.
Source: cryptonews.net