Michael Burry Criticizes US SEC's Tokenization Plan... 'A Second Bank Run Will Come'

▲ Virtual Asset Trading

As U.S. regulatory authorities push for a plan to allow stocks to be traded as virtual assets on the blockchain, strong opposition from market experts has intensified, along with controversy over consumer risks.

According to Moneywise, a U.S. financial media outlet, on May 24 (local time), the U.S. Securities and Exchange Commission (SEC) formulated an innovation exemption plan to allow ordinary stocks to be tokenized in a blockchain environment and bought and sold as virtual assets. Michael Burry, the famous contrarian investor and real-life model for the movie 'The Big Short,' criticized the plan through his Substack 'Cassandra Unchained,' stating it should be immediately halted. Burry warned, "We are heading straight into a cyberpunk future like Snow Crash, where human relationships are severed, and only dystopian values remain." He further condemned the authorities' actions, saying, "The only mission of a regulatory body is not to open a terrifying door," and that such moves would leave consumers defenseless in a dangerous environment.

If the plan passes, stocks could be tokenized by third parties without the consent of individual companies, allowing them to be traded 24/7, unlike the existing U.S. stock market, which is limited to weekdays from 9:30 AM to 4:00 PM. Opposition to stock tokenization also came from major institutional financial firms. Citadel Securities, a large trading firm, pointed out in a letter sent to authorities in December 2025 that this system would create a shadow market outside the core regulatory framework of the U.S. stock market. Citadel Securities expressed concerns that if stocks are traded outside the national market system, liquidity could become fragmented, and investor protection mechanisms could fundamentally collapse.

Experts analyzed that third-party tokenized stocks issued without corporate approval carry a high risk of not guaranteeing legitimate shareholder rights, such as voting rights or dividends. Daniel Labovitz, CEO of Green Impact Exchange, pointed out that tokens might not fully represent actual corporate ownership, preventing investors from enjoying the inherent benefits of stocks. Furthermore, if the same stocks are traded in fragmented, unconnected individual virtual asset markets, market fragmentation can occur, leading to asset price discrepancies. This is highly likely to result in uninformed individual investors purchasing tokens at prices significantly higher than their fair value.

The tokenized stock market can bypass strict regulatory standards required by traditional securities markets, such as anti-money laundering and know-your-customer obligations, thereby maximizing consumer risks. The vulnerable security of decentralized financial platforms is also a serious threat. Indeed, on April 18, hackers stole approximately $300 million from a decentralized financial platform, leading to a virtual asset "bank run" on one of the major platforms. Shay Boloor, Senior Market Strategist at Futurum Equities, warned that 24-hour unrestricted market access would increase market volatility and potentially trigger stock price manipulation by malicious actors.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*