US Securities and Exchange Commission (SEC) plans to Allowing people to trade shares on the blockchain, buying and selling them like cryptocurrency. Renowned short-seller Michael Burry doesn’t see anything positive in this.
Perhaps we are moving towards a cyberpunk future, like in [Neal Stephenson’s] Snow Crash, wrote Berry in his Cassandra Unchained group on Substack.
The SEC’s idea is that shares could be tokenized without the company’s consent and traded 24/7. As a reminder, the US stock market opens at 9:30 AM ET and closes at 4:00 PM ET on weekdays only.
On communication Bloomberg, under the SEC’s new “innovation exception” plan, there would be two types of tokenized shares: shares that companies tokenize themselves or allow tokenization, and shares tokenized by third parties without the company’s consent.
Tokenized third-party shares will not have the privileges typically associated with shares, such as voting rights and dividends. On the other hand, you will receive immediate proof of ownership, backed by the blockchain.
Tokens may not represent actual ownership of the company, and token holders may not receive the full benefits of shares, according to an unclear caution сказал Green Impact Exchange CEO Daniel Labovitz.
Moreover, Labovitz emphasized that tokenized securities can also cause fragmentation, since “when the same security is traded on different, unrelated markets, asset prices can diverge, meaning some buyers will overpay for their tokens.”
Given that cryptocurrency markets operate 24/7, while the stock market operates during more limited hours, desynchronization is inevitable.
Clearly, tokenized shares will make it difficult for consumers to understand the true value of their investments. Furthermore, such assets are not required to comply with regulatory standards applicable to the stock market.
“Regulators have one job: not to open scary doors,” Berry wrote in a comment on his Substack post. “This new plan will expose consumers to new and frightening risks they don’t typically face when investing through brokerage or retirement accounts.”
Indeed, the proposed exemption would weaken key investor protection measures and make it more difficult to combat money laundering.
Risk Warning:
The information on this website is for informational and educational purposes only and does not constitute investment advice or financial recommendations. Cryptocurrencies and digital assets carry a high level of risk, including possible loss of capital. The editors are not responsible for decisions made based on the published materials. It is recommended that you conduct your own research (DYOR) before making investment decisions. Read the editorial policy. https://happycoin.club/about/