Strategy shares fell 3.5% after Nasdaq revealed it was beginning to scrutinize how companies raise funds for cryptocurrency purchases.
According to The Information, the stock market now requires some companies to obtain shareholder approval before issuing new shares to purchase cryptocurrencies. This could slow the recent trend of crypto-focused companies.
Increased scrutiny has led to delayed deals and heightened market uncertainty, while other crypto-related stocks were also negatively impacted. Bitmine Immersion fell 8.7%, while SharpLink Gaming fell 9%. The spot price of Bitcoin also fell 2.5% during the session.
The report noted that companies that do not comply with the rules could be banned from trading or delisted from the Nasdaq exchange. This move follows what The Information described as a “dramatic transformation in the crypto market that began with the Trump administration.”
Companies are trying to attract investor interest by launching stocks linked to specific cryptocurrencies. While this strategy is particularly effective in emerging markets, regulatory delays pose risks that can be costly for companies. While federal securities regulators are taking a back seat, Nasdaq has become the primary regulator with its own listing rules.
*This is not investment advice.