Michael Burry Sounds Alarm On SEC Tokenized Stocks Push With Stark ‘Snow Crash’ Warning

• Tokenized stocks are a sign of a slide toward a ‘Snow Crash’-style cyberpunk future,” said Michael Burry, calling it a moment “that needs to be stopped.”
• The SEC could issue an exemption this week that would permit tokenized stocks to trade on crypto platforms, Bloomberg reported.
• The proposal would allow trading of tokens that track company shares without the company's permission, though those tokens might not have voting rights or dividends.

Michael Burry, the investor who famously predicted the 2008 housing crash and is known as ‘The Big Short’, issued a warning on Tuesday about the direction American financial markets are taking – targeting the convergence of crypto and traditional equities.

What Did Burry Say About Tokenized Stocks?

Burry, who goes by the name Cassandra Unchained on X, warned that tokenized stocks are a harbinger of a slide into a “Snow Crash cyber-punk future with no long-term personal relationships,” in which digital value is embedded in people and humanity becomes increasingly devalued. “This may be the point in time that needs to be stopped”, Burry wrote. With “#snowcrash," he called out, referring to Neal Stephenson’s 1992 dystopian novel about a fractured society ruled by corporate enclaves and virtual reality.

Burry’s warning came in response to a Bloomberg report that the Securities and Exchange Commission (SEC) is reportedly preparing to launch a so-called “innovation exemption” for tokenized stocks, possibly as soon as this week. 

How Will Tokenized Stocks Work?

The Bloomberg report stated that the SEC was leaning toward allowing trading of tokens that track a company's stock price without the company's permission, in a surprise move. Such “third-party” tokens would create a new way for people to bet on whether the stock goes up or down, on decentralized crypto venues.

These tokens, however, may not offer the benefits typically associated with owning a real stock, such as voting rights or dividends. The SEC proposal would deny listing rights to platforms that don't offer those perks. The proposal could create a parallel blockchain-based market for U.S. equities operating outside traditional exchange infrastructure.

Could Tokenized Stocks Fragment Equity Markets?

Regulators and market watchers described the move as a major regulatory test of whether stock trading can shift to crypto infrastructure without the investor protections of traditional equity markets, raising concerns about market fragmentation, particularly as Wall Street embarks on a tokenization boom, with much-anticipated IPOs like SpaceX (SPACEX) preparing to launch.

The Trump administration plans to incorporate a stock market regulatory exemption policy into its overall deregulation framework, aiming to align U.S. stock market regulation with the fast-growing cryptocurrency market. 

Read also: Goldman Sachs Sticks With Bitcoin, While 7.8 Million BTC Sit Underwater – Buys More CRCL, GLXY, COIN

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