SEC plan to scrap ‘Rule 611’ positive for tokenized US stocks: Galaxy
Stocks
The U.S. Securities and Exchange Commission has proposed rescinding Rule 611 and Rule 610(e), which currently mandate strict order protection and price quote standards across national market systems. Galaxy head of research Alex Thorn identified this move as a significant catalyst for tokenized U.S. equities, as current regulations effectively prohibit decentralized platforms from operating legally. Under existing rules, automated market makers (AMMs) are unable to comply with trade-through restrictions because they execute orders based on pool prices rather than cross-exchange price matching. Because AMM prices fluctuate constantly, they would inherently violate requirements to guarantee the best available price across all platforms. The SEC intends to replace these rigid mandates with a more flexible best execution framework, potentially accommodating the unique operational structure of blockchain-based trading. This regulatory shift follows the launch of the SEC's Project Crypto in August 2025, which aims to modernize digital asset oversight. If finalized after the 60-day feedback period, this change could remove the primary structural barrier preventing tokenized stocks from trading on decentralized exchanges.
Key points
- ▸SEC proposed rescinding Rule 611 and Rule 610(e) to modernize market regulations.
- ▸Current trade-through rules prevent AMMs from operating legally for tokenized U.S. stocks.
- ▸Proposed best execution framework could enable decentralized trading of tokenized equities.
- ▸SEC launched Project Crypto in August 2025 to integrate blockchain into U.S. markets.
Background
Automated Market Makers (AMMs) are decentralized protocols that use liquidity pools to facilitate asset trading without traditional order books. They rely on mathematical algorithms to determine prices, which often conflicts with legacy financial regulations designed for centralized exchange architectures.
Relevance
8/10