Two rules most retail investors have never heard of just landed in the SEC's crosshairs. The knock-on effect could reshape how American equities trade onchain.
On Thursday the agency proposed scrapping Rule 611 and Rule 610(e), two pillars of its national market system framework. The first bans what regulators call trade-throughs: an order on one exchange can't fill at a worse price than what's quoted elsewhere. The second stops an exchange from posting a bid at or above a price already available on a competing venue. Both exist to guarantee investors the best available price across the patchwork of US trading centers. And both, it turns out, are nearly impossible for decentralized markets to obey.
Why the plumbing matters for tokenized stocks
Galaxy's head of research, Alex Thorn, called the proposal one of the most significant openings yet for tokenized US equities. His reasoning is mechanical, not hype, which is why I'd take it seriously. Automated market makers, the pooled-liquidity programs that run most DeFi trading, fill orders against whatever the pool's internal price happens to be at that moment. They don't poll other venues. They can't reroute an order to a better quote sitting on Nasdaq.
That's the problem. Under current rules, an AMM holding a tokenized version of, say, Apple stock would be committing trade-throughs more or less constantly. By Thorn's read, that arguably makes the pool an illegal trading center from the moment it opens. Pool prices also drift continuously, which puts them in perpetual violation of the best-price guarantee the rules were built to enforce. You can't bolt a system designed for fragmented order books onto one that prices assets through a math formula and expect the two to agree.
Thorn expects the SEC to swap the old rules for a "best execution" standard, the kind of flexible framework that could actually let AMMs operate within the law. That's the part I'm watching. Rescinding a rule is easy to announce. Writing its replacement is where the real fight happens.
The proposal is open for public comment for 60 days. After that the agency reviews responses and can revise before anything becomes final. So nothing here is settled, and the feedback window will draw plenty of pushback from incumbent exchanges, who have reason to like the rules exactly as they are.
A pattern, not a one-off
This isn't an isolated gesture. The SEC launched Project Crypto back in August 2025, an effort to rewrite the rulebook for digital assets and blockchain in US markets, and it has since named digital assets a strategic priority running through 2030. The Rule 611 proposal reads as one more brick in that wall.
It also follows a stumble. The agency was reportedly ready to publish a plan last month that would have allowed tokenized stock trading outright, then pulled it after stock exchange officials raised concerns about how the thing would work in practice. So the regulators know the demand is real. They just haven't figured out the mechanics yet.
And the demand is real, sometimes embarrassingly so. Look at what happened around the SpaceX listing. As Cointelegraph reported, Bybit, Binance, Bitget Wallet and MEXC all canceled their tokenized SpaceX IPO campaigns when the company went public on Nasdaq on Friday. SpaceX opened at $150, up from a $135 IPO price, and closed at $161.11, valuing the firm north of $2 trillion off a $75 billion raise that ran more than four times oversubscribed.
The crypto platforms couldn't deliver. Several pointed fingers at Kraken-owned xStocks for failing to provide the underlying shares. Bitget Wallet's COO Alvin Kan called the outcome "disappointing" and said refunds were going out. It was the first serious attempt by these venues to hand users access to a blockbuster offering, and it broke on contact with reality.
That failure says something the Galaxy analysis only implies. The appetite for tokenized equities is sprinting well ahead of both the infrastructure and the rules. People wanted SpaceX exposure onchain badly enough that four exchanges took their money before anyone confirmed the shares existed to back it.
Clearing Rule 611 won't fix delivery failures or settlement plumbing. It removes one legal landmine, the one that made compliant AMM trading in US stocks a contradiction in terms. The question now, as I said up top, is what the SEC writes in its place, and whether the exchanges fighting the change can slow it down during the comment period. Sixty days starts the clock.