Lynq chief executive Jerald David says clearer cryptocurrency regulation will not, by itself, solve the practical difficulties institutions face when moving cash and collateral around markets that operate around the clock.
David told crypto.news that regulation would remove only one obstacle as digital assets, tokenized securities and conventional financial markets become increasingly connected. Once a trade has been agreed, institutions must still fund the position, deliver payment and transfer any collateral required.
Those processes become more complicated when a firm is dealing with multiple exchanges, counterparties and types of money across markets that remain open overnight, at weekends and on public holidays.
“I think regulation is obviously a big part of the conversation, but for institutions there is a very practical layer underneath it,” David said.
His comments come ahead of a reported White House meeting on 19 August involving cryptocurrency companies, prediction-market operators, regulators and traditional financial institutions.
Coinbase, Ripple, a16z, Chainlink, Paradigm and Kalshi are among the companies expected to attend, according to reports published earlier in August. President Donald Trump, SEC Chair Paul Atkins and CFTC Chair Michael Selig may also take part, people familiar with the plans said.
The White House and the regulators had not published a formal list of participants or a detailed agenda when the meeting was reported.
The discussions in Washington have largely focused on rules for digital-asset issuers and trading platforms, as well as the responsibilities of the agencies overseeing the sector. David said institutions also face an operational problem that sits below the legal framework: their funding and settlement systems do not always run during the same hours as crypto markets.
Cryptocurrency exchanges generally operate 24 hours a day, seven days a week. Banking and securities infrastructure, by contrast, often depends on business-day timetables, cut-off times and separate settlement arrangements.
That mismatch can leave a firm able to enter a trade but unable to access the cash or collateral needed immediately to complete it. Institutions may try to deal with the problem by keeping funds at several venues, but that can leave capital idle and increase exposure to individual counterparties.
A wider range of digital money is also being used in institutional markets. Stablecoins, tokenized bank deposits, tokenized money-market funds and ordinary bank balances can each serve different purposes. However, David said institutions need systems that can move value between counterparties when a payment or margin call falls due.
Stablecoin rules and settlement infrastructure
The US Treasury added to the regulatory debate on 17 August when it proposed rules for Section 3 of the GENIUS Act. The proposals would clarify 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 proposed framework, companies would generally need an appropriate federal or state licence to issue payment stablecoins in the US from 18 January 2027. From 18 July 2028, digital-asset service providers would generally be prevented from offering payment stablecoins to US customers unless they had been issued by a licensed provider.
The Treasury has opened a 60-day public consultation period following publication of the proposals in the Federal Register. The definitions would also affect foreign issuers and platforms that make their tokens available in the United States.
The proposals establish who may issue and distribute payment stablecoins, but do not create a single settlement network linking every bank, exchange, broker and custodian. David’s concerns relate to that separate operational layer, including how money moves between regulated entities after a transaction has been agreed.
Federal Reserve systems illustrate the difference between trading and payment schedules. FedNow provides continuously available instant payments for participating financial institutions, while Fedwire processes large-value bank transfers during defined operating periods.
The Federal Reserve says Fedwire currently operates for 22 hours each business day from Monday to Friday, excluding designated holidays. An expansion planned for 2028 or later will add Sundays and weekday holidays, but the service will still close for two hours each operating day and will not run on Saturdays.
The issue is becoming more significant as US regulators consider allowing more traditional assets to trade on blockchain networks. On 17 August, a report said the SEC was preparing a limited route that would allow qualified platforms to test round-the-clock trading in tokenized US stocks.
No final exemption, eligibility standard or launch date has been announced. SEC officials have also said that recording shares on a blockchain would not remove them from federal securities legislation or existing investor-protection obligations.
Demand for always-on collateral
Longer trading hours create a corresponding need for cash and collateral outside normal banking periods. DTCC said in May that financial firms commonly hold additional collateral and liquidity buffers because assets may not be available precisely when they are required.
The market infrastructure provider said tokenized collateral could enable firms to mobilise assets on demand, rather than pre-positioning extra funds at multiple locations. DTCC has also worked with Chainlink on a system intended to support continuous collateral management across traditional financial markets and blockchain networks.
A separate initiative involving BMO, CME Group and Google Cloud shows how banks are exploring the same challenge. BMO planned to allow institutional clients to 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 allow clients to move tokenized cash for margin and collateral without waiting for standard banking hours.
David said the gap between operating schedules could force institutions to place liquidity at every exchange or counterparty they expected to use. Funds held in multiple locations might then be unavailable for another trade, while exposure to a venue could increase if an account had to be funded before a transaction was executed.
“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 runs a private institutional network through tZERO Securities, an SEC-registered broker-dealer. The company says participants can make real-time transfers within the network, while client investments remain in segregated accounts. Users must also complete know-your-customer and anti-money-laundering checks.
Lynq said in February that assets held through its platform had exceeded $89m. It said it worked with more than 30 institutional digital-asset companies, including exchanges, custodians, market makers and over-the-counter trading desks.
In March, the company introduced a collateral-lock feature that allows users to designate assets as collateral without moving them outside the network. According to Lynq, the system prevents pledged assets from being used twice while allowing institutions to release and redeploy them once the related obligation has ended.
