SEC plan to scrap ‘Rule 611’ a boon for tokenized US stocks: Galaxy
Galaxy’s Alex Thorn says a plan to scrap rules on stock orders and quotes would remove a major barrier to tokenized stocks trading on decentralized platforms.
Galaxy’s Alex Thorn says a plan to scrap rules on stock orders and quotes would remove a major barrier to tokenized stocks trading on decentralized pl
Read Full Story at CoinTelegraph →Why This Matters
The SEC’s potential repeal of Rule 611—a cornerstone of traditional equity market structure—could mark a watershed moment for blockchain-based trading. By eliminating a regulatory hurdle that once forced tokenized stocks to mimic legacy market mechanics, the move signals a rare alignment between financial innovation and regulatory pragmatism. For institutions eyeing on-chain assets, this removes a critical friction point that has long constrained real-world asset tokenization.
Background Context
Rule 611, part of the SEC’s Regulation NMS, mandates that stock orders be routed to the exchange offering the best price—a system designed for centralized, high-frequency trading environments. Its rigid structure inadvertently penalized decentralized platforms that couldn’t replicate this priority without sacrificing their core advantages, such as atomic settlement or permissionless access. The rule’s origins predate the blockchain era, leaving it ill-equipped to accommodate emerging models of market participation.
What Happens Next
If implemented, the rule change would likely accelerate the launch of tokenized U.S. equities on decentralized exchanges, though regulatory clarity on custody and investor protections will remain a bottleneck. Expect a scramble among broker-dealers and DeFi platforms to test compliant frameworks, with early movers potentially gaining a first-mover advantage in a niche yet high-stakes market. The SEC’s decision may also force traditional exchanges to adapt, either by integrating blockchain rails or lobbying for alternative safeguards.
Bigger Picture
This development underscores a broader shift toward harmonizing legacy financial infrastructure with digital asset innovations, reflecting a growing recognition that rigid rules can stifle progress. It also highlights the SEC’s evolving posture under pressure from both crypto advocates and traditional finance, suggesting a potential thaw in its historically adversarial approach to market-structure reform. Ultimately, the case could set a precedent for how regulators treat tokenized assets across asset classes, from equities to commodities.
