SEC Eases Regulations, Tokenized U.S. Stock Trading Could Soon Enter the DeFi Ecosystem
SEC Proposes Rule Changes, Opening New Opportunities for Tokenized U.S. Stocks in DeFi
The U.S. Securities and Exchange Commission (SEC) has proposed removing two key rules under Regulation National Market System (Regulation NMS), sparking fresh discussions about the future of tokenized U.S. stock trading within the decentralized finance (DeFi) sector.
On June 11, the SEC announced plans to rescind Rule 611 and Rule 610(e), regulations that have shaped the U.S. stock trading system since 2005.
Rule 611 currently prevents stock trades from being executed at worse prices when better prices are available on other trading platforms. Meanwhile, Rule 610(e) is designed to prevent overlapping or conflicting price quotes across exchanges.
The SEC also said the proposal would remove several related definitions under Rule 600, while opening a 60-day public comment period before any final decision is made.
SEC Chairman Says Old Rules Are No Longer Efficient
SEC Chairman Paul Atkins said the regulations should be reviewed after nearly two decades, arguing that they have created unintended consequences that may be slowing market development.
According to Atkins, the proposal is intended to simplify market structure, reduce costs for market participants, and allow greater competition and innovation within financial markets.
However, the proposal does not immediately approve tokenized stock trading, as it only marks the beginning of a regulatory review process.
Analysts See Major Opportunity for Tokenized Stocks
Alex Thorn of Galaxy Digital said removing these rules could eliminate one of the biggest obstacles preventing tokenized U.S. stocks from expanding into DeFi markets.
He explained that Automated Market Makers (AMM), the trading mechanism widely used by DeFi protocols, struggle to comply with Rule 611 because transactions rely on liquidity pools where prices move automatically through algorithm-based systems.
The main issue is that DeFi systems cannot monitor stock prices across all traditional exchanges in real time before every transaction.
Rule 610(e) is also seen as problematic because prices inside DeFi liquidity pools constantly shift based on trading activity, potentially conflicting with prices in traditional markets.
Other Regulatory Challenges Still Remain
Even if these rules are removed, tokenized stocks would still face several other regulatory barriers.
U.S. brokers are still required to seek the best available prices for customers under FINRA Rule 5310. In addition, tokenized stocks must still comply with exchange registration requirements, clearing and settlement rules, and investor protection regulations.
Previously, the SEC was also reported to be exploring a special exemption that could allow blockchain-based public stocks to trade on blockchain platforms.
However, regulators have emphasized that tokenized shares must carry the same rights as traditional shares, including dividend payments and voting rights.
SEC Commissioner Hester Peirce also stated that any regulatory exemption would likely apply only to legitimate digital versions of publicly listed stocks, not synthetic stock tokens that do not grant ownership rights.
The SEC’s latest proposal signals a major shift in U.S. financial market policy and could pave the way for stronger integration between traditional equity markets and the growing blockchain and DeFi ecosystem.
