The Securities and Exchange Commission (SEC) has a plan to allow people to trade stocks on the blockchain, buying and selling them as cryptocurrencies.
Investor Michael Burry, “Big Short,” is not happy about that, to say the least.
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“We may be headed straight toward a Snow Crash cyberpunk future,” Burry said this week in his Substack, Cassandra Unchained (1). “This may be the moment when some future being must stop him from advancing.”
If the plan goes ahead, shares could be tokenized without a company’s consent and traded 24/7, unlike the US stock market, which opens at 9:30 a.m. ET and closes at 4 p.m. ET only on weekdays.
Burry is not the only big name in investing who is against stock tokenization. Citadel Securities, a major trading firm, sent a letter to the SEC rejecting the plan in December 2025 (2).
Here’s what the change would mean for both businesses and consumers.
Fragmentation Could Be a Major Issue for Tokenized Stocks
Bloomberg reports that there will be two types of tokenized stocks under the SEC’s new “innovation exemption” plan: stocks that companies tokenize themselves or authorize to be tokenized, and stocks that are tokenized by third parties without the company’s consent (3).
Third-party tokenized shares may not have all the privileges that shares normally come with, such as voting rights and dividends. On the other hand, you would get immediate proof of ownership backed by the blockchain.
“Tokens may not represent actual ownership of the company and token holders may not reap the full benefits of the action,” Daniel Labovitz, CEO of Green Impact Exchange (4), told Business Insider.
Tokenized stocks could also cause fragmentation, says Labovitz: “When the same security is traded on different markets that are not connected to each other, the price of the assets can diverge, meaning that some buyers will overpay for their token.”
This is especially likely since crypto markets are open 24/7, while the stock market operates on much more limited hours. That gives the two markets plenty of time to get out of sync.
Citadel Securities also expressed concerns about fragmentation in its letter to the SEC.
“While the rules governing the national market system may continue to be refined, facilitating the emergence of a “shadow” US securities market… would allow tokenized US stocks to be traded entirely outside the national market system, fragmenting liquidity and undermining core investor protections,” he said.