BCGAME - Free 5BTC Daily Bonus!- Tokenized shares gain traction with SEC proposal.
- DeFi can overcome regulatory barriers in the American market.
- Stock tokenization receives regulatory boost in the US.
The U.S. Securities and Exchange Commission (SEC) has introduced a proposal that could significantly alter how tokenized stocks are traded on DeFi protocols. The agency intends to revoke core rules of the NMS (National Market System) Regulation, a framework created in 2005 to organize stock trading in U.S. markets.
According to the SEC, the measure seeks to simplify the market structure and reduce operational costs for industry participants. The agency's chairman, Paul Atkins, stated that the proposal will allow competition and innovation to play a more significant role in the evolution of the U.S. stock markets.
Among the rules that could be eliminated is Rule 611, which prevents a platform from executing orders at prices lower than the best offers available on other exchanges at the same time. Rule 610(e) prohibits the display of quotes that result in locked or cross-priced trading between trading platforms.
The proposal opened a 60-day period for public comment before moving on to the next regulatory steps.
For cryptocurrency and tokenization industry experts, the potential change represents one of the most important initiatives ever presented to enable the trading of tokenized American stocks on decentralized networks.
Alex Thorn, head of research at Galaxy Digital, highlighted that Rule 611 creates obstacles for so-called AMMs (Automated Market Makers), a mechanism widely used in DeFi protocols.
“An AMM cannot comply with Section 611 by definition. It executes orders based on a linkage curve, regardless of the pool price, with slippage, at block granularity,” Thorn wrote. “An AMM cannot route intermarket sweep orders. It cannot ingest SIP data with latency guarantees. It cannot break a swap because there is a better quote on Nasdaq. Any pool in a tokenized NMS stock would be constantly trading and possibly be an illegal trading hub.”
According to him, Rule 610(e) creates similar difficulties, since MMAs continuously adjust prices according to user activity, which may conflict with current demands of the traditional market.
If the changes go ahead, the SEC would become primarily reliant on the best enforcement obligation outlined in FINRA Rule 5310, which is considered more flexible in accommodating decentralized trading models.
Jaret Seiberg, managing director of TD Cowen's Washington Research Group, believes the proposal has a strong chance of being approved. According to his assessment, final regulations could be completed during the first quarter of 2027.
