Risk Factors Relating to Tokenized $BLSH Shares
The following risk factors relate to the tokenization of Bullish ordinary shares (NYSE: BLSH). These risk factors may not reflect all risks associated with tokenized BLSH. Investors and prospective investors should carefully consider these risk factors together with all other available material information before making any decision to deal in tokenized BLSH or Bullish ordinary shares. This page contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. Bullish undertakes no obligation to update or revise any forward-looking statements except as required by applicable law.
Tokenized securities are a novel instrument and there is limited legal, regulatory, judicial, operational and market precedent for their treatment.
Tokenized securities are financial instruments that are formatted or represented as a crypto asset, where the record of ownership is maintained on one or more crypto networks. In May 2026, we announced the tokenization of our ordinary shares, which provides an additional mechanism for investors to hold and transfer our ordinary shares. The tokenized ordinary shares combine traditional equity ownership with blockchain-based recordkeeping. There is currently limited legal, regulatory, judicial, operational and market precedent governing how tokenized securities are characterized, transferred, taxed or enforced across jurisdictions or on various record keeping systems. For example, jurisdictions may not recognize our tokenized ordinary shares as securities, which could result in holders of our tokenized ordinary shares not being afforded the same rights as those holding shares in a traditional form. Courts, regulators, tax authorities, securities exchanges, depositories, clearing houses, brokers, custodians and other market participants may reach conclusions regarding the nature or treatment of our tokenized ordinary shares that differ from our expectations or the expectations of shareholders, including conclusions that are adverse to us or our shareholders. Regulatory frameworks applicable to tokenized securities continue to evolve, and future changes in law or regulation by various state, federal or foreign jurisdictions or securities exchanges could materially affect the rights of holders, the value, transferability or fungibility of the tokenized ordinary shares with traditional shares, or the legality of holding or trading the tokenized ordinary shares in certain jurisdictions.
We and the holders of the tokenized ordinary shares are dependent on third-party technology infrastructure, including blockchain networks and custodial systems, which are subject to operational, integrational, and cybersecurity risks.
The issuance, transfer, and record keeping of the tokenized ordinary shares rely on the continued operation and integrity of one or more blockchain networks and associated smart contract infrastructure, as well as the successful integration of these new processes and technologies into existing market-wide infrastructure built around traditional securities. Blockchain networks may be subject to software vulnerabilities, protocol or system failures, cyberattacks, forks or other temporary or long-term disruptions that could cause a loss of access to and/or invalidate records of ownership, which could be permanent. Smart contracts, once deployed, may contain errors or be exploited by malicious actors in ways that may be difficult or impossible to remediate. The custodians, technology service providers and other market participants engaged in connection with the issuance, transfer and/or record keeping of tokenized shares are third parties over whom we have limited control, and the failure, insolvency, error, negligence or misconduct of any such party, its employees or its affiliates, or a temporary or permanent disruption of its systems, could result in the loss of, or inability to access, tokenized shares. Holders should evaluate their own risk tolerance in relation to reliance on this evolving infrastructure.
Loss of private key access, wallet compromise, or transfer to an incorrect address may result in the permanent, irrecoverable loss of tokenized ordinary shares.
Ownership and transfer of tokenized ordinary shares on a blockchain network is controlled by private cryptographic keys associated with each holder's digital wallet. If a holder loses their private key, has their wallet compromised, or inadvertently transfers tokenized ordinary shares to an incorrect or inaccessible address, such tokenized ordinary shares may be permanently lost with no prospect of recovery by Bullish or any third party. Unlike traditional securities held in book-entry form through a custodian, blockchain-based transfers are generally irreversible. Holders bear sole responsibility for the security of their wallets and private keys unless custody has been delegated to a regulated custodian that maintains independent recovery mechanisms. We do not guarantee and may be unable to facilitate any replacement of or compensation for tokenized shares lost through key loss or wallet compromise.
The regulatory status of tokenized securities is uncertain and unsettled in many jurisdictions, and holders may face legal restrictions on holding, transferring, voting, receiving distributions or otherwise exercising stockholder rights in respect of tokenized ordinary shares.
In general, the legal classification of tokenized securities varies across jurisdictions and, in many cases, remains unsettled. Regulatory authorities in certain jurisdictions may classify our tokenized ordinary shares as securities, digital assets, or other instruments subject to local licensing, registration, or compliance requirements. Holders may be required to comply with transfer restrictions, investor eligibility requirements, sanctions screening, anti-money laundering obligations, or other applicable laws before acquiring, holding, or transferring our tokenized ordinary shares. Failure to comply with applicable laws could expose holders to civil or criminal liability and could result in the seizure or forfeiture of tokenized shares. We may, in our discretion or pursuant to legal requirements, impose additional transfer restrictions, freeze wallets, or redeem tokenized ordinary shares held by persons who are or become non-compliant with applicable eligibility requirements.
The tokenization of our ordinary shares may introduce risks and uncertainties that adversely affect the market for, and the trading price of, our ordinary shares, among other potential consequences.
The tokenization of our ordinary shares may introduce new risks and uncertainties related to the market and trading price of our ordinary shares. For example, although the tokenized ordinary shares are the same class of ordinary shares that currently trade on the New York Stock Exchange (“NYSE”), shareholders that elect to hold the tokenized ordinary shares will need to reclaim the traditional ordinary shares in order to trade the shares on NYSE. In addition, there is no guarantee that an active, liquid secondary market for the tokenized ordinary shares will develop or, if one develops, that it will be sustained. The market for tokenized securities broadly is at an early stage of development, and trading volumes, price discovery mechanisms, and market maker participation may be limited. Holders may be unable to sell their tokenized ordinary shares at a price reflecting their underlying value or at all. Reduced liquidity in the tokenized ordinary shares whether due to general investor unfamiliarity, uncertain demand, operational friction, inefficient linkages between the markets for tokenized ordinary shares and traditional ordinary shares or otherwise, could result in lower trading prices for the tokenized ordinary shares, and such negative price signaling from the market for tokenized ordinary shares could adversely impact the trading price of traditional ordinary shares.
Smart contract code governing the tokenized ordinary shares may contain errors or vulnerabilities, and upgrades or modifications may not be possible or may introduce new risks.
The tokenized ordinary shares are governed in part by smart contract code deployed on a blockchain network. Smart contracts are software programs and may contain coding errors, logic vulnerabilities, or design flaws that could be exploited to manipulate ownership records, transfer shares without authorization, or otherwise disrupt the intended operation of the token. Unlike traditional software, smart contracts may be immutable once deployed, meaning that errors may be impossible to correct without redeployment and a corresponding migration of tokenized ordinary shares to a new contract address, which may itself introduce operational and legal complexity. Any such errors, vulnerabilities, or the process of upgrading smart contracts could adversely affect the value of, or a holder's rights in respect of, their tokenized ordinary shares. Further, because smart contracts are agreements written in code, rather than natural language, judicial systems may experience challenges in interpreting these agreements in light of the parties’ intent.
Tax treatment of tokenized shares and transactions in tokenized shares is uncertain and may be adverse.
The tax treatment of acquiring, holding, transferring, or receiving distributions in respect of tokenized securities is uncertain in many jurisdictions and may differ materially from the treatment applicable to traditionally held securities. Tax authorities may characterize transactions involving tokenized shares differently from transactions in traditional securities, potentially resulting in additional tax liabilities, withholding obligations, penalties, or reporting requirements for holders. In particular, the transfer of tokenized shares on a blockchain may be characterized as a taxable disposal in jurisdictions where it would not be treated as such if effected through a traditional share transfer mechanism. Holders of our tokenized ordinary shares are strongly encouraged to obtain independent tax advice specific to their circumstances before acquiring or transacting in tokenized ordinary shares.
We may be required to redeem, cancel, or impose restrictions on tokenized ordinary shares in response to regulatory developments, technical events, or compliance obligations, which could adversely affect holders.
We reserve the right, and in certain circumstances may be required, to redeem or cancel tokenized ordinary shares, restrict their transfer, block particular wallet addresses, or take other unilateral action in response to applicable law, regulatory direction, court orders, or technical circumstances affecting the blockchain infrastructure on which the tokenized ordinary shares are recorded. These actions may be taken without the consent of affected holders. Our ability to take these actions may be enabled by smart contract functionality such as administrative or operator controls embedded in the token code. Holders should carefully review the terms and conditions applicable to the tokenized shares, including any provisions governing redemption, suspension, or cancellation, before investing.
The underlying blockchain network may undergo protocol changes, forks, or be discontinued, which could impair the functionality or value of tokenized shares.
The blockchain network on which transfers of tokenized ordinary shares are recorded is maintained by a decentralized network of participants, and we have no control over changes to the underlying protocol, including changes to consensus mechanisms, transaction fees, throughput capacity, or governance frameworks. Protocol upgrades, hard forks, or other changes could render the existing smart contracts that govern the tokenized ordinary shares incompatible with the updated network, require migration of records, or otherwise disrupt the operation of the tokenized ordinary shares. In the event that the underlying blockchain network is abandoned, deprecated, or subject to a contentious fork that results in competing chains, the trading price and operational continuity of the tokenized ordinary shares may be materially impaired. We cannot guarantee that we or applicable third parties will be able to migrate the tokenized ordinary shares to an alternative blockchain network in a timely manner or without adverse consequences for holders.
Holders of tokenized ordinary shares may face procedural or practical difficulties in exercising shareholder rights, and the legal treatment of tokenized recordkeeping remains unsettled in many jurisdictions.
While the tokenized ordinary shares are the same class as the traditional ordinary shares and are, therefore, intended to represent the same economic and voting rights as the traditional ordinary shares, the legal enforceability of those rights in a tokenized format has not been comprehensively formalized or subjected to regulatory or judicial review, and may depend on the interaction between the token terms, applicable corporate law, and the legal treatment of digital asset records in the relevant jurisdiction. In the event of a dispute regarding the exercise of shareholder rights — including voting, the receipt of dividends, or entitlements in a liquidation — a holder of tokenized ordinary shares may face procedural, practical, or legal difficulties in asserting those rights compared to a holder of traditional ordinary shares. The register of members maintained by Bullish under applicable corporate law is the definitive record of share ownership, and any inconsistency between on-chain records and the register of members will be resolved by reference to the register of members.
