SEC move could unlock tokenized stock trading on DeFi

The SEC’s plan to drop Rules 611 and 610(e) could clear the way for tokenized U.S. stocks to be traded on DeFi platforms, opening new possibilities for blockchain-based equity trading.

The U.S. Securities and Exchange Commission (SEC) has proposed eliminating Rules 611 and 610(e) under Regulation NMS, which have shaped U.S. equity trading for nearly two decades. Rule 611 prevents trades at prices worse than the best available market quote, while Rule 610(e) restricts locked or crossed quotations. Industry experts, including Alex Thorn of Galaxy Digital, note that these rules have been significant barriers to trading tokenized stocks on decentralized finance (DeFi) platforms. Automated market makers, a core component of DeFi, cannot comply with these requirements, limiting innovation in blockchain-based equity trading. The SEC's proposal aims to simplify market structure, reduce costs, and foster competition. The rulemaking process is expected to conclude by early 2027, with potential temporary exemptions for tokenization experiments. The public has 60 days to comment, marking a major step toward enabling tokenized U.S. stocks on blockchain platforms.