TLDR
- The SEC proposed eliminating Rules 611 and 610(e) from Regulation NMS, rules that have governed US stock trading since 2005
- Rule 611 blocks trades at prices worse than the best available quote; Rule 610(e) prevents locked or crossed quotes
- Galaxy Digital’s Alex Thorn called this “one of the biggest unlocks yet” for tokenized stocks trading in DeFi
- Automated market makers (AMMs) could not legally comply with these rules, blocking tokenized US equities from decentralized platforms
- The SEC expects to finalize the rule change in Q1 2027, but exemptions for early tokenization pilots may come sooner
The SEC has proposed scrapping two long-standing stock trading rules that experts say have blocked tokenized US equities from trading on decentralized finance platforms.
TODAY 🚨: The Commission proposed the rescission of Regulation NMS Rules 611 and 610(e).
This proposal would reduce costs for market participants and allow competition, innovation, and other market forces to shape the continued evolution of U.S. equity markets. pic.twitter.com/oIxAAdcSmE
— U.S. Securities and Exchange Commission (@SECGov) June 11, 2026
The rules — 611 and 610(e) of Regulation NMS — were introduced in 2005. Rule 611 stops trades from being executed at a worse price than the best available quote on any other exchange. Rule 610(e) bans venues from showing quotes that are locked or crossed against quotes elsewhere.
SEC Chairman Paul Atkins said the proposal is designed to “simplify market structure and reduce costs for market participants while allowing competition, innovation, and other market forces to shape the continuing evolution of our equity markets.”
The 60-day public comment period is now open.
Why This Matters for DeFi
Alex Thorn, head of research at Galaxy Digital, explained why these rules were a hard wall for tokenized stock trading in crypto markets.
Automated market makers — the programs that power decentralized exchanges — work by executing trades against a liquidity pool at whatever price that pool currently offers. They cannot check prices on Nasdaq. They cannot halt a swap because a better quote exists elsewhere. Under Rule 611, that makes every trade a violation.
“Any pool in a tokenized NMS stock would commit trade-throughs constantly and arguably be an illegal trading center,” Thorn wrote.
Rule 610(e) created the same problem. AMMs continuously update prices based on trading activity, meaning their quotes would routinely lock or cross the National Best Bid and Offer — something exchanges are currently required to prevent.
What Comes Next
If the rules are scrapped, the SEC is expected to rely instead on a “best execution” standard under FINRA Rule 5310. That framework is principles-based and broker-level, meaning it can accommodate how AMMs work.
Jaret Seiberg, managing director at TD Cowen’s Washington Research Group, said the proposal is likely to be adopted. Finalizing the rule is expected in Q1 2027.
But Seiberg added that tokenization pilots may not need to wait that long. He expects the SEC to offer early-stage tokenization projects exemptive relief from Rule 611 before the rule is officially repealed.
This proposal is part of the SEC’s broader “Project Crypto” initiative, launched in August 2025, aimed at building clearer rules for digital assets and blockchain in US markets.
Thorn noted that other hurdles remain, including exchange registration, clearance and settlement processes, and rules not built for decentralized trading. He said those issues may be addressed through a forthcoming SEC “innovation exemption.”
The SEC had reportedly planned to release a tokenized stock trading framework last month but delayed it after stock exchanges raised concerns about execution.
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