The Securities and Exchange Commission (SEC) has unveiled a plan to allow stock trading on the blockchain, enabling transactions akin to those seen in cryptocurrency markets. This proposed shift has sparked significant backlash from prominent figures in the investment community, including Michael Burry, the investor famously portrayed in “The Big Short.”
In a recent post on his Substack, Cassandra Unchained, Burry expressed his discontent, warning, “We may be headed full-on to a Snow Crash cyber-punk future.” He cautioned that the SEC’s initiative could mark a pivotal moment that necessitates intervention to prevent potential detriment.
If implemented, the SEC’s plan would permit the tokenization of stocks without the explicit consent of the relevant companies. This change would facilitate trading around the clock, breaking from the traditional U.S. stock market hours of 9:30 a.m. to 4 p.m. on weekdays.
Burry is not alone in his concerns. Citadel Securities, a noteworthy trading firm, has also taken a stance against the SEC’s proposal, sending a letter in December 2025 raising objections. The potential ramifications of the plan would profoundly affect both corporations and individual investors.
According to Bloomberg, the SEC’s new “innovation exemption” plan outlines two categories of tokenized stocks: those that companies themselves tokenize or authorize for tokenization and those tokenized by third parties without company consent. The latter may lack customary shareholder privileges such as voting rights and dividends, though they would provide blockchain-backed proof of ownership.
Daniel Labovitz, CEO of Green Impact Exchange, echoed concerns about fragmentation, explaining that when identical securities trade across unconnected markets, price discrepancies can arise. “This means that some buyers will overpay for their token,” he noted, highlighting the risks associated with the continuous trading nature of cryptocurrency markets compared to the constrained hours of the stock market.
Citadel Securities’ concerns regarding fragmentation were further articulated in their SEC correspondence. They warned that the emergence of a “shadow” U.S. equity market could disrupt liquidity and undermine fundamental investor protections, creating uncertainties about the true value of investments.
Moreover, the tokenization of stocks raises questions about regulatory compliance. Unlike traditional stock transactions, tokenized stocks may not be bound by the same level of scrutiny. Burry warned, “Regulators have one job. Do not open scary doors,” suggesting that this plan could expose investors to new and unsettling risks that they typically avoid when investing through conventional brokerage or retirement accounts.
Bloomberg’s analysis indicates that the proposed changes could weaken essential investor safeguards, including know-your-customer and anti-money laundering protocols. Additionally, decentralized finance (DeFi) platforms, which have faced security challenges—most notably a hack that resulted in nearly $300 million being stolen—present further risks for investors.
The unrestricted trading environment afforded by blockchain technology could also lead to heightened volatility and potential manipulation of stocks, according to Shay Boloor, chief market strategist at Futurum Equities. While a shift to a cyberpunk-style investment landscape is unlikely to occur overnight, industry experts warn that the potential for increased risk is genuine, even for the most risk-averse investors.
