Crypto markets have always been volatile. For years, we’ve blamed speculation, low liquidity and hype cycles for the whiplash pricing of altcoins (crypto tokens outside of the leading digital assets Bitcoin, Ethereum and Solana). But there’s an opaque force that exerts just as much influence: private market-making agreements.
These deals often determine which tokens thrive and which collapse. And over the years, there have been far more failures than successes.
Now, Wall Street firms are accelerating their exposure to crypto, investing in increasingly fringe assets and even adding them to corporate treasuries. Public companies Strategy (MSTR) and Metaplanet (3350.T) have amassed holdings of nearly $73 billion and $2 billion, respectively, and scores of other corporations have followed suit.
These companies are stepping into markets governed not by transparent rules or familiar oversight, but by unseen, off-chain contracts. A failure to understand how crypto market-making works will distort valuations, mislead investors and potentially spark a backlash that could ripple across both Web3 and traditional finance.
From left: Summer Mersinger, CEO, Blockchain Association; Sarah Reilly, vice president and senior tax counsel, Fidelity Investments, Alison Mangiero, head of staking policy and industry affairs, Crypto Council for Innovation; Jason Somensatto, director of policy,…
From left: Summer Mersinger, CEO, Blockchain Association; Sarah Reilly, vice president and senior tax counsel, Fidelity Investments, Alison Mangiero, head of staking policy and industry affairs, Crypto Council for Innovation; Jason Somensatto, director of policy, Coin Center; and Corey Frayer, director of investor protection Consumer Federation of America, at the witness table during a House Ways and Means Oversight Subcommittee hearing on “Making America the Crypto Capital of the World: Ensuring Digital Asset Policy Built for the 21st Century” on Capitol Hill on July 16, 2025, in Washington.
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AP Photo/Rod Lamkey Jr.
I’ve Seen Behind the Market-Making Curtain
Most people assume altcoins are volatile because they’re illiquid or built on shaky fundamentals. That’s partly true. But what’s often overlooked is the influence of market makers—the firms responsible for ensuring there’s enough liquidity to buy and sell these tokens in the first place.
Unlike their Wall Street counterparts, crypto market makers operate with little to no regulatory oversight. Their agreements are not public. There are no standardized disclosures, no audit trails and no governing body to hold them accountable.
Over the past decade, I’ve helped structure and manage market-making relationships at two of the largest global crypto exchanges, AscendEx and Gemini. I’ve also led FBG Capital, one of the major market-making firms in the space. Today, I run Forgd, a platform that helps token projects track market maker performance and negotiate better terms.
Here’s what I’ve seen: Most token founders are builders, not traders. They lack the financial background to assess how these contracts function, or how damaging they can be when incentives are misaligned. The result is often a one-sided deal, disguised as a liquidity solution, that leaves the project exposed and retail investors misled.
The most common—and most problematic—structure is known as the “loan + call option” agreement.
The Deal That Quietly Derails Crypto Tokens
In a “loan + call option” agreement, a project lends its native tokens to a market maker, who agrees to provide liquidity. In return, the market maker receives call options: the right, but not the obligation, to repay those token loans in U.S. dollars, at a set strike price.
If the token’s price spikes, the market maker cashes in, buying tokens at a steep discount and selling into the rally. But even if the token flounders, the market maker may still profit by selling the borrowed tokens early, withdrawing support, or shorting the asset outright. The project suffers, but the counterparty walks away profitable.
If this happened in traditional equity markets, it would be a scandal. Imagine a company IPO’ing on the NYSE, while a private actor had a backroom deal to dump discounted shares—without any disclosure to the public.
Equities have protections for this exact reason. The Securities Exchange Act of 1934 outlines clear boundaries designed to prevent manipulation during public offerings: Regulation M governs stabilization activity and passive market making, helping to ensure that prices aren’t artificially inflated, while Rule 10b-18 provides a safe harbor for stock buybacks, shielding companies from accusations of market manipulation when repurchasing their own shares.
Crypto has no equivalent safeguards. And as more institutional capital enters the space, this lack of structure is becoming a systemic risk.
Wall Street Is Next
It’s no longer just crypto-native funds or retail investors buying these assets. We’re now seeing mainstream firms and institutional allocators adding altcoins to their balance sheets, sometimes without full visibility into how these markets actually function.
That’s dangerous.
When token prices are being influenced by off-chain, through asymmetric contracts that no one outside the deal has access to, it undermines the integrity of the asset and misleads downstream investors. A market’s fundamentals might appear sound, when in fact they’re propped up by short-term gamesmanship and opaque incentives.
If left unchecked, this could discredit digital assets at a moment when they’re finally being taken seriously. It also opens the door to backlash from regulators and shareholders if firms suffer losses tied to undisclosed risk mechanics they never knew existed.
For crypto to mature as a credible, investable asset class, we need to bring these agreements out of the shadows and into the realm of professional accountability.
Founders need tools to benchmark proposed deals, simulate different scenarios, and negotiate on informed terms. Regulators, fund managers and institutional allocators should insist on basic transparency before engaging with new assets.
At a minimum, every market-making arrangement should include standardized disclosures that outline the structure of the agreement governing liquidity. These disclosures should make clear whether call options are involved, specify the strike prices and loan tenor associated with those options, and describe any hedging policies that may impact token performance. Without this level of transparency, investors and project teams are left to navigate blind, with little understanding of the dynamics shaping token markets.
These are table stakes. Without them, we’re asking sophisticated firms to operate in the dark, and exposing retail investors to risks they never signed up for.
If digital assets are going to sit on the balance sheets of public companies, the rules that govern those assets can’t be locked behind NDAs. They need sunlight, structure and scrutiny. Otherwise, we risk importing the worst parts of crypto into the heart of Wall Street—and learning too late that we could have done better.
Shane Molidor is the founder and CEO of Forgd, a token advisory and optimization platform that provides seamless access to essential tools for blockchain projects.