SEC Rule Repeal Could Boost Stock Token Trading on DeFi Platforms

Alex Thorn, head of research at Galaxy Digital, believes that proposed changes to U.S. Securities and Exchange Commission (SEC) market regulations could remove a key barrier to the growth of stock token trading on decentralized finance (DeFi) platforms.

The SEC has proposed repealing Rule 611, also known as the Order Protection Rule, and Rule 610(e), which restricts locked and crossed markets. These rules were designed for traditional, order-book-based stock exchanges and are difficult to implement in DeFi environments where automated market makers (AMMs) use liquidity pools rather than order books.

Thorn argues that removing these rules would create a regulatory environment where AMMs could legally and efficiently handle stock tokens.