SEC Proposes Rule Change to Unlock Tokenized Stocks Trading in DeFi

The US Securities and Exchange Commission (SEC) has proposed to scrap Rule 611 of Regulation NMS, which prohibits trade-throughs in stock order routing since 2005. This move is seen as a significant regulatory unlock for tokenized stocks, particularly those on decentralized finance (DeFi) platforms.

According to Galaxy Digital's head of research Alex Thorn, the proposal 'one of the biggest unlocks yet for tokenized stocks', removing a major structural barrier to trading in DeFi. The removal of Rule 611 would allow AMM-based tokenized US equity trading to operate at scale.

The SEC's proposed replacement is a principles-based best execution framework applied at the broker-dealer level rather than on every individual trade across venues. This shift makes it possible for brokers interfacing with DeFi pools to demonstrate policies reasonably designed to achieve best execution for clients overall, without needing to guarantee NBBO compliance on each atomic swap.

The move is part of the SEC's broader Project Crypto initiative, launched in August 2025 to modernize the regulatory framework for digital assets and blockchain technology in US markets. The proposal is now open for a 60-day public comment period before the SEC moves toward a final rule.