The SEC is laying the regulatory groundwork for stock tokenization: the repeal of Reg NMS paves the way for DeFi
The U.S. Securities and Exchange Commission (SEC) has officially proposed repealing two pillars of Regulation NMS — Rules 611 and 610(e). This is not merely a technical adjustment, but a strategic maneuver that could fundamentally reshape the structure of the American stock market and, critically, create legal space for tokenized assets.
Rule 611, known as the "trade-through rule," prohibited executing trades at a price worse than the best quote available on any other trading venue. The second rule restricted the display of quotes that lock or cross the prices of other exchanges. SEC Chairman Paul Atkins stated directly: these rules, in effect for 20 years, are outdated and have created "unintended consequences" that stifle innovation and increase costs.
For the traditional market, this represents a reduction in regulatory pressure. But the true breakthrough awaits the DeFi and tokenization sectors. As Alex Thorn from Galaxy Digital rightly noted, the current rules are physically incompatible with the operation of automated market makers (AMMs). Decentralized protocols operating on mathematical formulas cannot track liquidity on Nasdaq or NYSE in real time and halt transactions. After the repeal, tokenized stocks will be able to circulate legally in DeFi pools, opening up a vast liquidity market.
Instead of rigid restrictions, the SEC is moving to a "best execution" principle — a more flexible and adaptive approach. The final decision is expected in the first quarter of 2027. Prior to that, pilot projects with temporary exemptions for tokenization are possible.
My analysis: This is undoubtedly the most significant regulatory signal for RWA (Real-World Assets) in recent years. However, one should not expect instant euphoria. Commissioner Hester Peirce has already warned: an "innovation exemption" does not mean permission to issue synthetic assets. The regulator is proceeding cautiously, but the direction is clear — the infrastructure for stock tokenization is being built right now.