SEC Plan to Scrap Rule 611 Could Be the Biggest Regulatory Unlock Yet for Crypto Tokenized US Stocks

The SEC simply eliminated the single largest authorized impediment standing between Crypto DeFi and US fairness markets. On June 11, the company formally proposed to rescind Rule 611 of Regulation NMS, the trade-through prohibition that has ruled inventory order routing since 2005, together with Rule 610(e), which bans locked and crossed quotations.

For tokenized shares, the structural implications are fast and profound.

Galaxy Digital’s head of analysis Alex Thorn called the proposal “one in all the largest unlocks but for tokenized shares”, the elimination of what he described as “one in all the largest structural limitations to tokenized US equities buying and selling in DeFi.”

The proposal is now open for a 60-day public remark interval earlier than the SEC strikes towards a remaining rule.

The transfer sits inside the SEC’s broader Project Crypto initiative, launched in August 2025 to modernize the regulatory framework for digital property and blockchain expertise in US markets. Rule 611’s repeal, if finalized, can be the most consequential piece of that puzzle but.

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Rule 611 and the Order Protection Rule: Why AMMs Have Been Structurally Illegal

Rule 611, additionally known as the Order Protection Rule, was adopted in 2005 as the centerpiece of Regulation NMS. It prohibits trade-throughs, executing a inventory order at a value worse than the finest protected quote accessible on every other registered change.

In principle, it hard-wires the National Best Bid and Offer (NBBO) into each fairness transaction throughout all venues.

The drawback for tokenized equities is structural and unsolvable underneath the present framework. A DeFi AMM costs trades algorithmically, towards no matter the pool value is at the second of execution, derived from a constant-product method slightly than by routing to the NBBO.

Thorn put it plainly: any AMM pool providing tokenized US shares “would commit trade-throughs continually and arguably be an unlawful buying and selling heart.” Rule 610(e) compounds the drawback – AMMs can’t halt a commerce when a greater quote exists elsewhere, that means they’d be in steady violation on that entrance too.

After 2 a long time of Rule 611, it’s high time that the SEC assessment its unintended penalties which have hindered the long-term progress of our markets.

I look ahead to reviewing public enter as we take a cautious method to keep away from repeating the identical errors that introduced us right here. https://t.co/jswyzoox1v

— Paul Atkins (@SECPaulSAtkins) June 11, 2026

The SEC’s proposed substitute is a principles-based best execution framework utilized at the broker-dealer degree slightly than on each particular person commerce throughout venues.

That shift is what makes AMM-based tokenized equities workable, brokers interfacing with DeFi swimming pools would want to show insurance policies moderately designed to obtain finest execution for shoppers general, with no need to assure NBBO compliance on every atomic swap.

Commissioner Hester Peirce, in her supporting assertion, argued the present Order Protection Rule had “helped gasoline dysfunction” by encouraging change proliferation and suppressing innovation slightly than defending traders.

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Crypto RWA Tokenization Stakes: The Market This SEC Rule Change Was Blocking

Tokenized equities sit inside the fast-expanding real-world asset (RWA) class, the place institutional capital has been steadily constructing infrastructure for on-chain variations of conventional monetary devices.

Platforms together with Robinhood and Kraken have been creating tokenized inventory capabilities, and the SEC had reportedly ready a separate innovation exemption for genuine tokenized variations of exchange-listed US equities, backed 1:1 by underlying shares at a certified custodian, earlier than suspending its launch final month after conventional change officers raised execution considerations.

Rescinding Rule 611 resolves the core incompatibility that made that exemption legally fraught in the first place.

Policy analysts at TD Cowen’s Washington Research Group count on a remaining SEC vote on rescission by Q1 2027, assuming a regular comment-and-reproposal cycle, a timeline that will align with different market-structure reforms underneath Regulation NMS modernization.

International regulatory motion can be accelerating the stress: Japan’s recent reclassification of crypto assets as monetary devices alerts that competing jurisdictions should not ready for Washington to act.

The aggressive window is actual. Wall Street just isn’t debating tokenization anymore, it’s constructing the rails. Citi, DTCC, and a rising roster of prime brokers are already deep into on-chain settlement infrastructure, and the elimination of Rule 611 clears the final main regulatory impediment for AMM-based tokenized US fairness buying and selling to function at scale.

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