SEC Rule Change Could Boost Tokenized Stocks in DeFi

The U.S. Securities and Exchange Commission (SEC) is considering a major regulatory shift that could open the door for tokenized stocks to thrive in decentralized finance (DeFi). On June 12, the agency proposed rescinding two key rules—Rule 611 and Rule 610(e)—from its National Market System (NMS) regulations. According to Galaxy Digital’s head of research, Alex Thorn, the move could remove one of the biggest structural barriers to trading tokenized equities on DeFi platforms.

Rule 611, commonly known as the “trade-through” rule, prevents stock orders on one exchange from being executed at worse prices than those available on others. Meanwhile, Rule 610(e) prohibits exchanges from posting bids that match or exceed better quotes on other platforms. These rules, designed to ensure price fairness and transparency in traditional markets, have inadvertently stifled innovation in tokenized stocks. DeFi’s automated market makers (AMMs), for instance, cannot comply with these rules because they execute trades based on liquidity pool prices, which constantly fluctuate and don’t reference external quotes.

“This is one of the biggest unlocks yet for tokenized stocks,” said Thorn, adding that AMMs operating under the current framework would violate trade-through rules and could be deemed illegal trading centers. The SEC is reportedly exploring a “best execution” framework to replace the rescinded rules, potentially allowing AMMs to operate legally while maintaining some level of investor protection.

Why This Matters for Tokenized Stocks

Tokenized stocks, which represent blockchain-based versions of traditional equities, have struggled to gain regulatory clarity in the U.S. Despite their potential to increase market access and reduce transaction costs, they face significant compliance hurdles under existing securities laws. The SEC’s latest proposal aligns with its broader efforts to modernize market structure. Recent initiatives include shortening the securities settlement cycle to T+1 (adopted in February 2023) and revisiting rules that limit innovation, such as the vacated Share Repurchase Disclosure Rule in October 2023.

“Project Crypto,” launched by the SEC in August 2025, appears to be part of this trend. The initiative aims to integrate digital assets and blockchain technology into U.S. capital markets, signaling a shift toward accommodating decentralized financial tools. If the proposed changes move forward, tokenized stocks could gain a foothold in regulated DeFi ecosystems, creating new opportunities for both retail and institutional investors.

Next Steps

The SEC has opened a 60-day public comment period for its proposal, during which industry participants, exchanges, and other stakeholders can weigh in. The agency will review feedback and may modify the proposal before finalizing it. This comes after a reported delay last month on a separate plan to enable tokenized stock trading, as traditional stock exchanges raised concerns over execution mechanics and market impact.

For traders and developers in the DeFi space, this proposal is a potential game-changer. If enacted, it could pave the way for legally compliant tokenized stock trading platforms, eliminating long-standing regulatory roadblocks. Market participants should closely monitor the SEC’s decision, as the final rules will shape the trajectory of tokenized equities in the U.S. for years to come.

Galaxy Digital and other industry voices view the proposal as a rare regulatory opening for blockchain-based financial products. “This is a huge opportunity,” Thorn emphasized, underscoring the potential for DeFi protocols to finally tap into the $5 trillion U.S. equities market.

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