The SEC’s proposal to scrap Rule 611 could reshape market-structure assumptions behind tokenized U.S. stock trading on DeFi.
The U.S. Securities and Exchange Commission proposed on June 11, 2026 to rescind Rule 611 of Regulation NMS, a move that could remove one of the structural barriers to tokenized U.S. stocks trading on decentralized finance platforms.
The proposal, filed as Release No. 34-105655, would also eliminate Rule 610(e), which restricts locking and crossing quotations. Together, the two rules have shaped how U.S. equity orders are routed and executed since Regulation NMS took effect in 2005.
What to Know
- Rule 611 is a proposal to rescind, not a final rule. The SEC is seeking public comment before any change takes effect.
- Removing the trade-through rule could matter for tokenized equities, but other legal and compliance hurdles remain unresolved.
What the SEC Is Proposing With Rule 611
Rule 611, known as the order-protection or trade-through rule, requires trading venues to route orders to whichever exchange displays the best price. The rule was designed to prevent inferior executions for retail investors, but it also locks equity trading into a specific routing framework tied to the national market system.
The SEC assigned the proposal docket number S7-2026-20. Comments are due 60 days after the proposal is published in the Federal Register, giving market participants a formal window to weigh in.
It is important to distinguish between a proposal and a final rule. The SEC has not rescinded Rule 611; it has opened a rulemaking process that could lead to rescission. The outcome depends on the comment period, potential revisions, and a final commission vote.
Why Scrapping Rule 611 Could Matter for Tokenized U.S. Stock Trading on DeFi
Rule 611’s trade-through framework assumes a centralized routing infrastructure: exchanges, alternative trading systems, and broker-dealers connected through the national market system. Decentralized protocols, including automated market makers, do not fit neatly into that architecture.
If tokenized versions of U.S. equities were to trade on DeFi platforms, the trade-through rule would create a compliance conflict. An AMM-based venue cannot guarantee that every execution matches or beats the national best bid and offer displayed on traditional exchanges.
Galaxy Digital’s head of firmwide research, Alex Thorn, reacted publicly on June 11, calling the proposal “one of the biggest unlocks yet for tokenized stocks.”
the SEC just proposed rescinding Rule 611 of Reg NMS, the trade-through rule that has defined US equity market structure since 2005
this is a tradfi story, yes, but this is also one of the biggest unlocks yet for tokenized stocks 👇 pic.twitter.com/T0PJvWxysI
— Alex Thorn (@intangiblecoins) June 11, 2026
Source: @intangiblecoins on X
However, Thorn’s interpretation is an expert view, not an SEC statement. Rescinding Rule 611 alone would not resolve other securities-law requirements around issuance, custody, broker-dealer registration, transfer-agent functions, or exchange and ATS compliance for tokenized stocks.
SIFMA, the securities industry trade group, noted that any impact from rescinding Rule 611 should be evaluated together with overnight trading and the incorporation of tokenized securities. That framing suggests the industry sees Rule 611 as one piece of a broader market-structure puzzle, not a standalone fix.
The intersection of traditional market-structure reform and crypto-native infrastructure is not entirely new. Discussions around governance proposals in DeFi protocols and the growing role of stablecoins in market structure have already highlighted how regulatory decisions in traditional finance can ripple into decentralized ecosystems.
What Is Still Unclear if Rule 611 Is Removed
Even if the SEC finalizes the rescission, several open questions would determine whether tokenized U.S. stocks can actually trade on DeFi platforms.
- Venue compliance: Would a DeFi AMM need to register as an exchange or ATS to list tokenized equities?
- Custody and settlement: How would tokenized stock trades settle, and who would serve as transfer agent?
- Investor protection: Without the trade-through rule, what mechanisms would prevent retail investors from receiving inferior executions?
- Broker-dealer obligations: Would intermediaries facilitating tokenized stock trades on DeFi need full broker-dealer registration?
The 60-day comment period will likely surface detailed industry positions on these questions. Market participants watching this space should also keep an eye on how enforcement actions shape the regulatory boundaries for crypto-related securities activity.
The proposal removes one cited barrier, but the path from SEC rulemaking to tokenized equities trading on decentralized venues involves multiple regulatory layers that this proposal does not address.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Cryptocurrency and digital asset markets carry significant risk. Always do your own research before making decisions.
