Key Takeaways
- • SEC formally proposed rescinding Rule 611 (Order Protection Rule) on June 11, 2026, removing the 20-year-old trade-through prohibition that has structurally prevented decentralized finance platforms from trading tokenized U.S. equities in compliance with existing regulations.
- • Galaxy Digital's head of research Alex Thorn characterized the proposal as "one of the biggest unlocks yet for tokenized stocks," describing Rule 611's repeal as the removal of "one of the biggest structural barriers to tokenized US equities trading in DeFi."
- • The SEC simultaneously proposed scrapping Rule 610(e), which bans locked and crossed quotations, further opening market structure for DeFi-based equity trading.
- • The proposal is part of the SEC's broader Project Crypto initiative, launched in August 2025, designed to modernize the regulatory framework for digital assets and blockchain technology in U.S. markets.
- • A 60-day public comment period is now open before the SEC finalizes the rule change, with Rule 611's repeal representing the most consequential piece of the agency's crypto modernization effort to date.
Summary
The Securities and Exchange Commission formally proposed rescinding Rule 611 of Regulation NMS on June 11, 2026—a significant regulatory shift that removes a fundamental structural obstacle to decentralized finance platforms trading tokenized U.S. equities. Rule 611, known as the Order Protection Rule and adopted in 2005, mandates that all equity trades execute at the National Best Bid and Offer (NBBO) across registered exchanges, effectively prohibiting "trade-throughs" at inferior prices.
The regulatory impediment has proven insurmountable for DeFi platforms. Automated Market Makers (AMMs) price trades algorithmically through constant-product formulas rather than routing to the NBBO, rendering them structurally incompatible with Rule 611's requirements. By proposing to rescind both Rule 611 and Rule 610(e)—which prohibits locked and crossed quotations—the SEC has removed what institutional-grade crypto infrastructure providers identified as the single most consequential legal barrier to tokenized equity trading in decentralized venues.
Galaxy Digital's research leadership called the proposal "one of the biggest regulatory unlocks yet for tokenized stocks," underscoring the market significance among sophisticated institutional players. The repeal, if finalized, would enable DeFi platforms to execute equity orders without the structural constraints that currently force them into legal gray areas or prevent compliance entirely.
This action sits within the SEC's broader Project Crypto initiative, launched in August 2025, which aims to modernize the regulatory framework governing digital assets and blockchain technology across U.S. markets. Rule 611's proposed repeal represents the most substantial concrete step the agency has taken under this modernization effort. The proposal is now subject to a 60-day public comment period, after which the SEC will move toward issuing a final rule. For institutional investors and family offices evaluating exposure to tokenized asset markets, this regulatory development substantially improves the legal framework for domestic equity tokenization on decentralized platforms.
The regulatory impediment has proven insurmountable for DeFi platforms. Automated Market Makers (AMMs) price trades algorithmically through constant-product formulas rather than routing to the NBBO, rendering them structurally incompatible with Rule 611's requirements. By proposing to rescind both Rule 611 and Rule 610(e)—which prohibits locked and crossed quotations—the SEC has removed what institutional-grade crypto infrastructure providers identified as the single most consequential legal barrier to tokenized equity trading in decentralized venues.
Galaxy Digital's research leadership called the proposal "one of the biggest regulatory unlocks yet for tokenized stocks," underscoring the market significance among sophisticated institutional players. The repeal, if finalized, would enable DeFi platforms to execute equity orders without the structural constraints that currently force them into legal gray areas or prevent compliance entirely.
This action sits within the SEC's broader Project Crypto initiative, launched in August 2025, which aims to modernize the regulatory framework governing digital assets and blockchain technology across U.S. markets. Rule 611's proposed repeal represents the most substantial concrete step the agency has taken under this modernization effort. The proposal is now subject to a 60-day public comment period, after which the SEC will move toward issuing a final rule. For institutional investors and family offices evaluating exposure to tokenized asset markets, this regulatory development substantially improves the legal framework for domestic equity tokenization on decentralized platforms.
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