Key Takeaways
- • The SEC formally proposed on June 11, 2026, to rescind Rule 611 of Regulation NMS and Rule 610(e)—foundational equity market structure rules in place since 2005—removing the trade-through prohibition and restrictions on locked/crossed quotations that have structurally prevented decentralized finance (DeFi) from trading tokenized equities.
- • Research firm Benchmark designated the SEC's NMS proposal as "the most consequential US crypto rule" of 2026, with Galaxy Digital's head of research Alex Thorn calling it "one of the biggest unlocks yet for tokenized stocks" and the removal of "one of the biggest structural barriers to tokenized US equities trading in DeFi."
- • The current Rule 611 framework enforces the National Best Bid and Offer (NBBO) across all registered exchanges, but DeFi AMMs (automated market makers) price trades algorithmically using constant-product formulas rather than NBBO routing—making AMM structures structurally incompatible with existing equity market rules.
- • The proposal is open for a 60-day public comment period before the SEC moves toward a final rule, with rescission representing the most consequential component of the SEC's broader Project Crypto initiative launched in August 2025 to modernize digital asset regulation.
- • Rescission would immediately eliminate the single largest legal and structural obstacle to tokenized US equity trading on blockchain networks, potentially unlocking a new asset class for DeFi platforms and institutional investors seeking decentralized settlement and custody of equity positions.
Summary
On June 11, 2026, the Securities and Exchange Commission formally proposed rescinding Rule 611 of Regulation NMS and Rule 610(e)—two foundational pillars of US equity market structure that have governed stock order routing since 2005. The proposal has been characterized by market participants and research firms as a watershed moment for cryptocurrency and tokenized assets, with profound implications for how equities could trade on decentralized finance platforms.
Rule 611, formally known as the Order Protection Rule, mandates that equity trades execute at the best available price across all registered exchanges—the National Best Bid and Offer (NBBO). The rule was designed to ensure price transparency and prevent trade-throughs, where orders execute at inferior prices when better quotes exist elsewhere. Rule 610(e) complements this by prohibiting locked and crossed quotations. However, these rules present a fundamental structural incompatibility with how decentralized finance operates. DeFi protocols like automated market makers (AMMs) price trades algorithmically using constant-product formulas based on liquidity pool dynamics, not by routing to the NBBO. Under current Rule 611, this pricing mechanism is incompatible with SEC-regulated equity trading, creating what market participants describe as an unsolvable structural problem for tokenized equities.
Research firm Benchmark has designated the SEC's NMS proposal as the single most consequential US crypto regulation of 2026. Galaxy Digital's head of research, Alex Thorn, reinforced this assessment, calling the proposal "one of the biggest unlocks yet for tokenized stocks" and characterizing the removal of Rule 611 as "one of the biggest structural barriers to tokenized US equities trading in DeFi." The economic and competitive implications are immediate: rescission would eliminate the primary legal obstacle preventing institutional-grade equity tokenization on blockchain networks, potentially opening trillions of dollars in equities to decentralized settlement and custody models.
The SEC's proposal sits within Project Crypto, a broader regulatory modernization initiative launched in August 2025 to update the federal securities framework for digital assets and blockchain technology. The agency noted that the proposal is "intended to simplify market structure and reduce costs for market participants while allowing competition, innovation, and" expanded market access. The formal proposal has entered a 60-day public comment period, after which the SEC will move toward finalizing the rule. If adopted, the rescission of Rule 611 would represent the most consequential regulatory development for tokenized assets to date.
Rule 611, formally known as the Order Protection Rule, mandates that equity trades execute at the best available price across all registered exchanges—the National Best Bid and Offer (NBBO). The rule was designed to ensure price transparency and prevent trade-throughs, where orders execute at inferior prices when better quotes exist elsewhere. Rule 610(e) complements this by prohibiting locked and crossed quotations. However, these rules present a fundamental structural incompatibility with how decentralized finance operates. DeFi protocols like automated market makers (AMMs) price trades algorithmically using constant-product formulas based on liquidity pool dynamics, not by routing to the NBBO. Under current Rule 611, this pricing mechanism is incompatible with SEC-regulated equity trading, creating what market participants describe as an unsolvable structural problem for tokenized equities.
Research firm Benchmark has designated the SEC's NMS proposal as the single most consequential US crypto regulation of 2026. Galaxy Digital's head of research, Alex Thorn, reinforced this assessment, calling the proposal "one of the biggest unlocks yet for tokenized stocks" and characterizing the removal of Rule 611 as "one of the biggest structural barriers to tokenized US equities trading in DeFi." The economic and competitive implications are immediate: rescission would eliminate the primary legal obstacle preventing institutional-grade equity tokenization on blockchain networks, potentially opening trillions of dollars in equities to decentralized settlement and custody models.
The SEC's proposal sits within Project Crypto, a broader regulatory modernization initiative launched in August 2025 to update the federal securities framework for digital assets and blockchain technology. The agency noted that the proposal is "intended to simplify market structure and reduce costs for market participants while allowing competition, innovation, and" expanded market access. The formal proposal has entered a 60-day public comment period, after which the SEC will move toward finalizing the rule. If adopted, the rescission of Rule 611 would represent the most consequential regulatory development for tokenized assets to date.
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