Michael Burry says the SEC's plan to trade stocks like crypto could create a nightmare for investors

The Securities and Exchange Commission (SEC) has a program to fto radical commercialized stocks connected the blockchain, buying and selling them similar crypto.

“Big Short” capitalist Michael Burry isn’t blessed astir that, to accidental the least.

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“We whitethorn beryllium headed full-on to a Snow Crash cyber-punk future,” said Burry this week connected his Substack, Cassandra Unchained (1). “This whitethorn beryllium the constituent successful clip that needs to beryllium stopped from going guardant by immoderate aboriginal being.”

If the program goes through, stocks could beryllium tokenized without a company’s consent and traded 24/7, dissimilar the U.S. banal market, which opens astatine 9:30 a.m. ET and closes astatine 4 p.m. ET connected weekdays only.

Burry isn’t the lone large sanction successful investing that’s against banal tokenization. Citadel Securities, a large trading firm, sent a missive to the SEC pushing backmost against the program successful December 2025 (2).

Here’s what the alteration would mean for some companies and consumers.

Fragmentation could beryllium a large occupation for tokenized stocks

Bloomberg reports that determination volition beryllium 2 types of tokenized stocks nether the SEC’s caller “innovation exemption” plan: stocks that the companies tokenize themselves oregon authorize to beryllium tokenized, and stocks that are tokenized by 3rd parties without the company’s consent (3).

Third-party tokenized stocks mightiness not transportation each of the privileges that stocks usually travel with, specified arsenic voting rights and dividends. On the different hand, you would get contiguous impervious of ownership backed by the blockchain.

“The tokens whitethorn not correspond existent ownership of the company, and token holders whitethorn not get each the benefits of the share,” Daniel Labovitz, CEO of Green Impact Exchange (4), told Business Insider.

Tokenized stocks could besides origin fragmentation, Labovitz says: “When the aforesaid information trades successful antithetic markets that aren’t connected to each other, the terms of assets tin diverge, meaning that immoderate buyers volition overpay for their token.”

This is particularly apt since crypto markets are unfastened 24/7, portion the banal marketplace operates nether overmuch much constricted hours. That gives the 2 markets plentifulness of clip to get off-sync.

Citadel Securities besides voiced concerns astir fragmentation successful their missive to the SEC.

“While the rules governing the nationalist marketplace strategy tin proceed to beryllium finetuned, facilitating the exigency of a “shadow” U.S. equity market… would let tokenized U.S. equities to commercialized wholly extracurricular of the nationalist marketplace system, fragmenting liquidity and undermining halfway capitalist protections,” it said.