The Securities and Exchange Commission (SEC) proposed scrapping the two-decade-old rule that has anchored US equity market structure, a move Galaxy Digital says removes one of the largest obstacles to trading tokenized stocks onchain.
The Commission voted on June 11 to propose rescinding Rules 611 and 610(e) of Regulation NMS, opening a 60-day public comment period that runs from the proposal’s publication in the Federal Register. Rule 611, the order protection rule, bars trading centers from executing trades at prices worse than protected quotes displayed on other venues. Rule 610(e) restricts locking and crossing quotations in national market system stocks. The proposal also rescinds related defined terms in Rule 600 and makes conforming changes to other provisions.
SEC Chairman Paul S. Atkins framed the rescission as a correction to consequences the agency never intended when it adopted the framework. “After two decades of Rule 611, it is high time that the Commission review its unintended consequences that have hindered—rather than enhanced—the long-term growth of our markets,” Atkins said. He added that the proposal would simplify market structure and reduce costs for participants while letting competition and innovation shape how equity markets evolve.
Why The Rule Blocks Onchain Trading
Galaxy Digital head of firmwide research Alex Thorn called the proposal one of the biggest unlocks yet for tokenized stocks, arguing the order protection rule made compliant onchain equity trading effectively impossible.
“An AMM cannot comply with 611 by construction. It executes against a bonding curve at whatever the pool price is, with slippage, at block-time granularity.”
The structure means an automated market maker (AMM) cannot reference and respect the national best bid and offer at the moment of execution the way Rule 611 demands, and it cannot route intermarket sweep orders or halt a swap because a better quote sits on another exchange—leaving any pool holding a tokenized NMS stock to commit trade-throughs constantly and risk being treated as an illegal trading center.
With Rule 611 removed, order-handling obligations would fall to the broker-level best execution duty under FINRA Rule 5310, a principles-based standard a broker can satisfy through regular review rather than trade-by-trade enforcement. Thorn argued that framework can accommodate an AMM while the prior structure could not.
What Still Stands In The Way
Tokenized securities still face open questions on exchange and ATS registration, clearance and settlement, and other rules not built for DeFi or peer-to-peer trading. Thorn pointed to the SEC’s forthcoming innovation exemption as the mechanism the agency may use to handle venue registration issues while the rescission clears the underlying market structure barrier.
The timing lands as major institutions move deeper into tokenized assets. Citigroup launched a blockchain-based platform allowing wealthy and institutional clients to trade tokenized shares of private companies, built on infrastructure from SIX Digital Exchange, with the bank acting as custodian and tokenization agent and the product initially open to foreign investors. Citi separately projected the tokenized real-world asset market could grow from $17 billion to $5.5 trillion by 2030, driven by operators such as DTCC, Nasdaq, and Intercontinental Exchange moving tokenized securities from pilots into production.
