SEC Rule Change Could Unleash Tokenized U.S. Stock Trading in DeFi

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SEC rule rollback could unlock tokenized U.S. stock trading in DeFi

The Securities and Exchange Commission (SEC) is considering changes to its rules for trading stocks, which could impact the growing areas of digital tokens representing U.S. stocks and decentralized finance (DeFi). The proposed changes would remove two important parts of a set of rules known as Regulation NMS, sparking discussion about how these new technologies should be regulated.

Summary

  • SEC proposed removing Rules 611 and 610(e), changing long-standing trade protections for U.S. equities markets.
  • Analysts say the move could help DeFi market makers support tokenized U.S. stock trading.
  • Tokenized equities still face registration, settlement, clearing, and investor-rights questions under U.S. securities rules.

On June 11, the Securities and Exchange Commission (SEC) announced it plans to eliminate two rules – Rules 611 and 610(e) – that have governed how stocks are traded in the U.S. since 2005.

Rule 611 prevents stock trades from happening at a disadvantageous price when a better price is already offered elsewhere. Essentially, if a better price is available on another trading platform, no platform can execute a trade at a worse price.

Rule 610(e) covers how trades are quoted when prices reach or go beyond the best current buying and selling prices for U.S. stocks. It requires trading centers to prevent quotes that match or exceed these top prices.

Today, I’m following a significant proposal from the Commission – they’re suggesting we remove Regulations NMS Rules 611 and 610(e). As a researcher, I see this as a move that could lower costs for those involved in the market and really let competition and innovation drive how U.S. equity markets develop going forward.

— U.S. Securities and Exchange Commission (@SECGov) June 11, 2026

According to the SEC, the new plan would also eliminate certain definitions in Rule 600 and update other related areas. People will have 60 days to share their thoughts on the proposal once it’s officially published in the Federal Register.

SEC Chairman Atkins says rule change could cut costs

As an analyst, I’ve been following the SEC’s proposed changes closely. Chairman Paul Atkins has explained that the goal is to streamline how our stock markets work, particularly after twenty years of operating under Rule 611. He believes this rule may have unintentionally hindered market growth and created unnecessary complexities, and this plan is designed to address those issues.

SEC Chairman Paul S. Atkins stated that after twenty years of Rule 611, the Commission needs to examine its negative effects, which have actually slowed down the growth of our markets instead of helping them.

According to Atkins, this plan aims to make the market simpler and cheaper for everyone involved, while still encouraging competition and new ideas to drive future improvements in the stock market.

As an analyst, I’ve reviewed the proposal and it doesn’t immediately allow for tokenized stock trading. Instead, it initiates a formal rule-making process. This means the agency is opening it up for feedback from market participants before they make a final decision on whether to move forward with rescinding the current regulations.

Analysts point to tokenized stocks

According to Alex Thorn from Galaxy Digital, the new proposal could be a game-changer for bringing tokenized U.S. stocks into the decentralized finance (DeFi) space. He explains that current rules, specifically Rule 611, are difficult for automated trading platforms to follow because they operate using liquidity pools and pricing curves rather than traditional order books.

According to Thorn, Automated Market Makers (AMMs) are fundamentally unable to meet the requirements of rule 611. They operate based on a price curve, and trades are executed with some price impact (slippage) at the moment the transaction is processed on the blockchain.

As a crypto investor, I’ve been looking into tokenized US stocks on DeFi platforms, and I’ve hit a major roadblock. The way most decentralized exchanges – specifically, Automated Market Makers or AMMs – are built, they simply can’t meet a key regulation called Rule 611. Basically, AMMs execute trades based on a price curve and whatever’s available in the liquidity pool *at that exact moment*, which means there’s always some price slippage. Rule 611 requires best execution, and that’s really hard to guarantee with an AMM’s current setup.

— Alex Thorn (@intangiblecoins) June 11, 2026

Decentralized finance (DeFi) pools face a challenge: they can’t instantly verify prices from every exchange before a trade. Plus, they lack the ability to find the best prices by checking multiple markets like traditional trading platforms do.

Thorn also pointed out that Rule 610(e) presents similar problems. Because prices on Automated Market Makers (AMMs) change with trading activity, pools of tokenized stocks could frequently result in prices that don’t match those shown on traditional markets.

Tokenized equities still face other rules

If the Securities and Exchange Commission (SEC) changes its rules, financial experts believe brokers might be held to a higher standard when ensuring they get the best possible price for their customers’ trades. Currently, FINRA Rule 5310 already requires brokers to find the most favorable terms when fulfilling customer orders.

This system might work better for markets dealing with tokens than traditional, individual trade protections. However, tokenized stocks still have challenges to overcome, such as getting registered on exchanges, following trading venue regulations, and handling the processes of clearing, settlement, and ensuring investor protections.

The Securities and Exchange Commission (SEC) has been exploring a new rule that could let traditional stocks, turned into digital tokens, be traded on blockchain networks. Under this plan, these tokenized shares would need to have the same benefits as regular stocks, such as the right to receive dividends and vote in company decisions.

According to crypto.news, Commissioner Hester Peirce also believes any potential exemption for crypto assets will likely be narrow. She explained it would probably cover digital versions of traditional stocks, but not tokens that mimic stocks without giving holders the same rights as shareholders.

This new SEC proposal is part of a larger trend in policy changes. It has the potential to make the market work more smoothly by removing one obstacle, but the ultimate rules will be determined by public feedback and future decisions from the agency.

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2026-06-12 08:28