The U.S. Securities and Exchange Commission’s proposal to repeal rules on order protection and price quotations could remove a major legal hurdle for tokenized U.S. stocks.
SEC on Thursday suggested to repeal two rules in its regulations on the national market system. Rule 611, which prohibits “trade-throughs,” where an order for shares on one exchange cannot be for a worse price than another, and Rule 610(e), which prohibits exchanges from displaying an offer at the same or higher price than that available elsewhere.
Head of Galaxy Research Alex Thorn he said the proposal is “one of the biggest unlocks yet for tokenized stocks” as it would remove “one of the biggest structural barriers to trading tokenized US stocks in DeFi.”
The SEC has sought to overturn rules restricting crypto and blockchain technology. He launched “Project Crypto” in August 2025 with the goal of making rules for the use of digital assets and blockchain in the US markets.
Source: Alex Thorn
Thorn said that automated market makers (AMMs) in cryptocurrency, or programs that facilitate trading by pooling assets, cannot comply with trading rules because they execute orders against “regardless of the price of the pool.”
He added that AMM also can’t stop trading if there is a better listing elsewhere, meaning any rally in tokenized shares governed by current rules “would be constantly trading and likely an illegal trading center.”
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AMM prices are also constantly fluctuating and would also be in constant violation of rules aimed at guaranteeing investors get the best price across all platforms, Thorn said.
The SEC is likely to replace the rules with a “best execution” framework, which could allow AMMs under the rules, Thorn said.
The agency has put its proposal out for feedback for 60 days, where it will then review the responses and may change its proposal in response to comments.
This comes as the SEC was reportedly set to announce a plan last month to allow tokenized stock trading, but delayed the plan after exchange officials raised concerns about how the plan would be implemented.
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