Tokenized Stocks Face Critical Liquidity Hurdle: ONDO CEO Reveals How 24-Hour NYSE, Nasdaq Trading Could Unlock Billions

NEW YORK, March 2025 – A fundamental structural mismatch between traditional financial markets and the cryptocurrency ecosystem is creating significant liquidity challenges for tokenized stocks, according to ONDO Finance CEO Ian de Bode. In a recent statement reported by CoinDesk, de Bode identified a potential solution that could unlock billions in value: the adoption of 24-hour trading by the New York Stock Exchange (NYSE) and Nasdaq. This proposal addresses a critical pain point where tokenized versions of traditional stocks become illiquid during weekends and after-hours, complicating operations for market makers and investors alike. The call for extended trading hours represents a pivotal moment in the convergence of traditional finance (TradFi) and decentralized finance (DeFi), highlighting the growing pressure on legacy systems to adapt to a global, always-on digital economy.

The Structural Liquidity Challenge for Tokenized Stocks

Tokenized stocks are digital representations of traditional equity securities issued on blockchain networks. Consequently, these assets bridge two worlds with opposing operational tempos. The cryptocurrency and DeFi markets operate 24/7, 365 days a year. Conversely, traditional equity markets like the NYSE and Nasdaq maintain weekday trading sessions with limited after-hours access. This discrepancy creates what de Bode describes as a “liquidity vacuum” during periods when traditional markets are closed. For instance, a tokenized Apple stock traded on a decentralized exchange becomes extremely difficult to price and trade from Friday evening until Sunday night, when global crypto markets remain active. This time mismatch directly impacts market depth and increases volatility for these hybrid assets.

Market makers, entities that provide liquidity by continuously buying and selling assets, face particular difficulties. Specifically, they struggle to hedge their positions effectively. Hedging involves taking an offsetting position to manage risk. If the reference market (the traditional NYSE) is closed, there is no reliable price discovery mechanism for the underlying asset. Therefore, providing liquidity for the tokenized version becomes a high-risk endeavor. This structural issue currently limits the scalability and adoption of tokenized securities, confining them to a niche despite their transformative potential for settlement, ownership, and accessibility.

Expert Analysis: The Mechanics of the Mismatch

Financial infrastructure experts point to several technical consequences of this divide. Primarily, the weekend gap creates arbitrage opportunities that are too risky for most institutional players to capture. Arbitrage typically involves buying an asset in one market and simultaneously selling it in another to profit from price differences. However, without the underlying market being open to facilitate the hedge, the arbitrage trade transforms into a speculative bet. Furthermore, the liquidity thinness leads to wider bid-ask spreads. Ultimately, this increases costs for end-users and deters participation. Data from crypto analytics platforms frequently shows trading volume for major tokenized stocks dropping by over 80% during traditional market closures, confirming the severity of the liquidity drain.

The Case for 24-Hour Traditional Market Trading

The proposal for 24-hour trading in traditional equity markets is not new, but the rise of tokenization adds a compelling, modern argument. Proponents highlight that global capital flows no longer adhere to a 9-to-5 schedule in a single time zone. Major economic announcements, geopolitical events, and corporate earnings from Asia and Europe regularly move markets outside of U.S. trading hours. Currently, this volatility manifests in futures and pre-market trading, but these venues often lack the depth of the primary exchange. Transitioning to a continuous trading model would involve significant operational changes, including staggered staffing, enhanced automated systems, and updated regulatory frameworks for trade settlement.

A shift to 24-hour trading could deliver multiple benefits beyond aiding tokenization:

• Global Investor Access: Investors worldwide could trade during their local business hours.
• Reduced Overnight Gap Risk: Companies and investors would face less uncertainty from news breaking during closed markets.
• Alignment with Digital Assets: Traditional finance would better integrate with the always-on crypto and forex markets.

However, challenges remain. These include concerns about lower liquidity during off-peak hours, higher operational costs for exchanges and brokers, and potential worker welfare issues. The table below outlines a simplified comparison of the current and proposed states:

Broader Implications for Finance and Regulation

The push for extended hours intersects with larger trends in financial digitization. Regulatory bodies, including the U.S. Securities and Exchange Commission (SEC), have been cautiously exploring the digital assets space. A move by major exchanges could accelerate regulatory clarity for tokenized securities. Moreover, it would signal institutional validation of the underlying blockchain technology’s role in future market structure. Other global exchanges, such as the London Stock Exchange and the Singapore Exchange, have also experimented with digital asset platforms, indicating a competitive dimension to this innovation.

For the cryptocurrency industry, solving the liquidity problem is crucial for the next phase of growth. Tokenized real-world assets (RWAs) are widely seen as a multi-trillion-dollar opportunity that could bring substantial capital and legitimacy to blockchain networks. Seamless integration between traditional and digital markets is a prerequisite for this growth. If traditional markets evolve, the innovation could flow both ways. Concepts native to DeFi, like automated market makers (AMMs) and instant settlement, might eventually influence the design of next-generation TradFi systems.

The Road Ahead: Incremental Steps and Pilot Programs

Industry observers suggest a full 24-hour shift may happen incrementally. Initial steps could involve significantly extended hours, perhaps spanning 18 or 20 hours per weekday, before moving to a full 24/5 model. Pilot programs focusing on highly liquid exchange-traded funds (ETFs) or a select group of mega-cap stocks could test infrastructure and demand. The success of 24-hour trading in U.S. Treasury futures markets provides a relevant precedent. Collaboration between traditional exchanges and established crypto-native institutions like ONDO Finance could help design systems that serve both traditional and tokenized investors effectively.

Conclusion

The liquidity issue facing tokenized stocks, as highlighted by ONDO Finance CEO Ian de Bode, underscores a fundamental growing pain in the fusion of traditional and digital finance. The proposal for NYSE and Nasdaq to adopt 24-hour trading presents a direct, structural solution to align market operations with the global, non-stop nature of the digital age. While implementing such a change involves complex logistical and regulatory hurdles, the potential payoff is substantial: deeper liquidity for tokenized assets, better risk management for market makers, and a more integrated, efficient global financial system. As tokenization of stocks and other real-world assets accelerates, pressure on traditional market infrastructure to adapt will only intensify, making this a critical debate for the future of finance.

FAQs

Q1: What are tokenized stocks?
Tokenized stocks are digital tokens on a blockchain that represent ownership in a traditional company’s stock. They aim to mirror the price and economic rights of the underlying security while enabling faster, global trading on crypto platforms.

Q2: Why is liquidity a problem for them on weekends?
Liquidity dries up because the traditional reference markets (NYSE, Nasdaq) are closed. Without a live price from the primary market, crypto market makers cannot hedge effectively, so they withdraw, causing wide spreads and low trading volume.

Q3: Has 24-hour stock trading been tried before?
Limited after-hours sessions exist, but true 24-hour continuous trading for the main equity market is not standard. Some futures and forex markets operate nearly 24/7, providing a model for how it might function.

Q4: What are the biggest hurdles to 24-hour NYSE/Nasdaq trading?
Key hurdles include operational costs for staffing and systems, ensuring sufficient liquidity during all hours, regulatory approval for settlement cycles, and addressing the well-being of financial industry workers.

Q5: How would 24-hour trading benefit regular investors?
It would allow investors in different time zones to trade during their day, enable quicker reaction to global news, and potentially reduce price gaps at market open, leading to a more continuous and accessible market.