SEC Floats Reg NMS Changes Seen as Potential Tailwind for Tokenized Equities

CoinDesk reports that on June 11 the U.S. Securities and Exchange Commission proposed amendments to certain rules under Regulation NMS, seeking to remove structural constraints embedded in how U.S. stocks trade. While the effort is aimed at traditional equity markets, market participants say it could also reduce key compliance frictions for tokenized stocks traded onchain. The proposal would rescind two provisions: Rule 611 and Rule 610(e). Rule 610(e) mainly limits cross-market quoting, while Rule 611 requires trading venues to prevent executions at prices worse than other protected quotes. SEC Chair Paul Atkins said the current framework has not reliably improved market efficiency over the last two decades, and has instead contributed to higher trading costs while limiting the evolution of market structure. The SEC argues that rolling back these rules would simplify the market and give competition and innovation more room to shape trading. Galaxy Digital's head of research, Alex Thorn, said Rule 611 has been one of the main obstacles keeping tokenized U.S. equities from being traded within DeFi. He noted that automated market makers (AMMs) execute against pool-based pricing and slippage, which makes it difficult to satisfy traditional "best execution" expectations designed for centralized equity venues. Thorn said that if the SEC ultimately approves the proposal, the scope for tokenized-stock trading via DeFi frontends and onchain liquidity pools could expand materially. In Galaxy's view, the updated approach would better fit AMM-style onchain trading models that the existing rules have struggled to accommodate. Galaxy cautioned that the changes would not resolve the full set of operational and regulatory issues. Even if Rule 611 is repealed, tokenized equities would still face practical hurdles including clearing, settlement, and registration with relevant trading venues. Thorn said these challenges could eventually be addressed through the SEC's so-called "innovation exemption" framework. That initiative was delayed last month after pushback from traditional financial institutions, leaving the timeline uncertain. Tokenized equities continue to scale. The market is currently about $3.5 billion, with monthly transaction volume nearing $5 billion and roughly 357,000 holding addresses. Reported data indicate the segment has grown about 44% over the past month, suggesting that further easing of regulatory constraints could accelerate onchain issuance and trading.