SEC Rule 611 rollback may unlock tokenized US stocks

The Securities and Exchange Commission’s plan to unwind two Reg NMS trading rules could remove a stubborn legal barrier for tokenized US stocks, according to crypto-market analysts. Under the June 11 proposal, the agency would rescind Rule 611, the trade-through rule, and Rule 610(e), which governs locked and crossed markets.

For now, no rule has changed. The proposal must go through a 60-day public comment period after publication in the Federal Register, and the SEC has not voted on a final version. The filing still matters because Rule 611 is part of the market plumbing that ties US equity trades to protected quotes across national exchanges.

Tokenized-equity builders see the issue in practical terms. Galaxy Digital research head Alex Thorn told The Block the proposal could strip away limits that have kept DeFi automated market makers from trading tokenized US equities at scale. Thorn called it “one of the biggest unlocks yet,” The Block reported.

Adopted in the mid-2000s, Rule 611 was designed to prevent trade-throughs, or executions at prices worse than protected quotations displayed somewhere else in the national market system. In equities, brokers and trading centers generally have to respect the best visible price. On-chain pools do not sit neatly inside that architecture, which is why the rule has become a friction point for stock-like tokens.

Paul Atkins, the SEC chairman, cast the proposal as a test of whether a two-decade-old rulebook still fits the market. In a statement at the open meeting, Atkins said the commission should review unintended consequences from Rule 611 after two decades of use. That framing pushed the item beyond crypto policy and into the broader debate over US equity market structure.

Rule 610(e) covers a different corner of the same system. Locked and crossed markets involve quotes that overlap or invert across venues, an issue that matters less to most retail traders than to brokers and exchanges operating inside the quote-routing network. Rescinding both provisions would not wipe away US equity regulation. It would show, though, that the SEC is willing to reopen rules written before blockchain venues were part of the policy conversation.

Reg NMS meets DeFi

Market data give the proposal more than theoretical weight. Tokenized equities have become a measurable market rather than a slide-deck theme, with sector value reaching $5.5 billion, up 147 per cent from $2.23 billion at the start of the year, according to The Block’s June 8 analysis. The recent growth has come from exchange expansion and demand for exposure to private companies such as SpaceX, not broad adoption of public-stock tokens by US retail investors.

Care is still needed with the label. Tokenized equities can refer to tokens representing economic exposure to a share, products backed by custodial holdings, or synthetic instruments that track a stock price. The SEC proposal does not bless any of those structures. It would instead narrow one market-structure objection tied to where and how trades execute.

Jaret Seiberg drew the same line in his reaction to the proposal, according to The Block. “This is broadly positive for the tokenization of equity securities as Rule 611 is a barrier to action,” Seiberg said.

That helps explain why a dense Reg NMS item landed as a tokenization catalyst. Without a change, automated market makers holding pools of tokenized equity exposure can run into a rulebook built around routing orders among protected exchange quotes. With a change, the fight moves closer to registration, custody, disclosure and broker-dealer status, where tokenized-stock platforms still face heavy constraints.

What still has to happen

The comment fight comes next. The SEC’s rulemaking notice asks for feedback on rescinding the two provisions, giving exchanges, brokers, crypto venues and investor advocates room to argue over how much protection the trade-through rule still provides.

The proposal is a catalyst, not a clearance certificate. A final rescission would not guarantee mass adoption of tokenized US equities, or settle whether every tokenized-stock product is legally sound. It would make one of the clearest market-structure frictions smaller, which explains why analysts treated the proposal as more than a routine cleanup.