SEC Rule 611 Proposal May Unlock Tokenized US Equities

TLDR

• SEC Rule 611 repeal may open a new path for Tokenized Stocks.

• Tokenized Stocks could gain traction as SEC reviews trade rules.

  

• SEC market rule changes may support tokenized equity trading.

• DeFi stock pools may benefit from SEC’s Rule 611 proposal.

• SEC proposal could reshape the future of Tokenized Stocks.

SEC rulemaking has opened a new debate over Tokenized Stocks, as the agency seeks to remove two major market structure rules. The proposal targets order protection and quote display limits that shape U.S. equity trading. The move could create room for tokenized U.S. equities and DeFi-based trading systems.

SEC targets Rule 611 and quote restrictions

The Securities and Exchange Commission proposed amendments to rescind Rule 611 and Rule 610(e) under Regulation NMS. Rule 611 blocks trade-throughs in national market system stocks. Rule 610(e) restricts locked and crossed quotations across trading venues.

The proposal also removes related definitions in Rule 600 and makes conforming changes to connected provisions. The agency wants to simplify parts of the equity market framework. It also wants competition and market forces to guide future trading models.

SEC Chairman Paul Atkins said the agency must review unintended effects from Rule 611 after two decades. He said the rule hindered market growth instead of improving it. The agency will receive public comments for 60 days before deciding possible changes.

Tokenized Stocks may gain a clearer route

The proposal could remove a major barrier for Tokenized Stocks because automated market makers use different execution systems. AMMs execute trades against pool prices instead of routing orders across exchanges. As a result, they struggle under trade-through rules built for traditional markets.

Galaxy head of research Alex Thorn said the change could unlock Tokenized Stocks in DeFi markets. He said current rules create structural problems for tokenized U.S. equity trading. His view centers on how AMMs cannot stop trades when better prices appear elsewhere.

Under existing rules, Tokenized Stocks pools could face constant trade-through risks. Their prices also move continuously as pool balances change. Therefore, those pools may conflict with rules designed around displayed quotes and venue comparisons.

Best execution shift could reshape equity markets

The SEC may move toward a best-execution framework if it removes the current rules. That approach could focus on fair execution standards instead of strict quote-matching restrictions. It could also give Tokenized Stocks more legal space inside regulated market structures.

The proposal also fits the SEC’s wider effort to update rules for blockchain-based markets. The agency launched Project Crypto in August 2025 to address digital assets and blockchain use. That program supports rulemaking around crypto, tokenization, and market infrastructure.

The move follows reports that the SEC delayed a plan for Tokenized Stocks after exchanges raised concerns. Those concerns focused on how tokenized equity trading would work in practice. However, the Rule 611 proposal now gives the debate a clearer regulatory path.

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