The US Securities and Exchange Commission proposal to rescind rules around order protections and price quotes could remove a major legal barrier for tokenized US stocks.
The SEC on Thursday proposed to scrap two rules in its national market system regulations. Rule 611 that bans “trade-throughs,” where a stock order on one exchange can’t be for a worse price than on another, and Rule 610(e) banning exchanges from displaying a bid at the same or higher price than what is available elsewhere.
Galaxy head of research Alex Thorn said the proposal is “one of the biggest unlocks yet for tokenized stocks” as it would remove “one of the biggest structural barriers to tokenized US equities trading in DeFi.”
The SEC has been looking to undo rules that restrict crypto and blockchain technology. It launched “Project Crypto” in August 2025 with the goal of making rules for the use of digital assets and blockchain in US markets.
Source: Alex Thorn
Thorn said that automated market makers (AMM) in crypto, or programs that facilitate trading by pooling assets, can’t comply with trade-through rules as they execute orders against “whatever the pool price is.”
He added that an AMM also can’t stop a trade if a better quote exists elsewhere, meaning any pool in a tokenized stock governed by the current rules “would commit trade-throughs constantly and arguably be an illegal trading center.”
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Prices from AMMs also constantly fluctuate and would also be in constant violation of the rule aiming to guarantee investors get the best price across all platforms, Thorn said.
The SEC is likely to replace the rules with a “best execution” framework, which could permit AMMs under the rules, Thorn said.
The agency put its proposal up for feedback for 60 days, where it will then review responses and may change its proposal in response to comments.
It comes as the SEC was reportedly set to release a plan last month allowing tokenized stock trading, but postponed the plan after officials from stock exchanges raised concerns over how the plan would be executed.
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