On June 12, 2026, the SEC directly targeted the heart of the national market system for U.S. equities: proposing to revoke the order protection rule in Regulation NMS's Section 611 and the locking/crossing quote restrictions in Section 610(e), and immediately opened a public comment period of about 60 days, inviting all stakeholders, including exchanges, market makers, and brokers, to express their opinions. Under the current Section 611, no trading center may match orders at prices inferior to protected quotes (including NBBO) in other markets, while Section 610(e) restricts locking quotes and crossing quotes to maintain a “uniform pricing order” across markets; this mechanism, which has provided a framework for NMS stocks for many years, clashes structurally with the AMM model that relies on pool pricing, price slippage, and block confirmation timing, causing tokenized U.S. stocks attempting to trade in DeFi to be long trapped in a compliance paradox of “unable to align with NBBO in real-time but must comply with order protection.” Alex Thorn, research director at Galaxy Digital, bluntly stated that Section 611 is “one of the biggest structural barriers” to trading tokenized U.S. stocks in DeFi; multiple Chinese crypto media outlets also interpreted this move by the SEC as “clearing key obstacles for tokenized U.S. stocks to go on-chain.” However, it remains uncertain how far apart the price protection and innovation space will be, whether broker-dealers will take over the best execution duty, and other core designs. This institutional conflict extending from traditional securities market structure rules to on-chain AMMs is forcing regulators and market participants to jointly redefine the boundaries for tokenized U.S. stocks to exist legally in DeFi.
How Order Protection Rules Lock Up On-Chain U.S. Stocks
In the traditional national market system for U.S. stocks, Reg NMS Section 611 acts as a "guardrail" baked into the system: any platform recognized as a trading center cannot execute an order at prices inferior to protected quotes from other exchanges, with regulators specifying this standard through the National Best Bid and Offer (NBBO) — as long as a better buy or sell order exists elsewhere, you cannot act as if you didn't see it. The accompanying Section 610(e) prohibits so-called locking and crossing quotes to prevent manipulation through mismatched prices, where someone posts “buy prices equal to sell prices” or even “buy prices higher than sell prices” across different markets. For regulators, this is a price protection mechanism focused on comparing each transaction against the NBBO and blocking “crossing trades,” ensuring that regardless of which exchange the order is routed to, investors are not “slaughtered” at an obviously worse price due to information asymmetry.
The issue arises when these rules are applied unchanged to the on-chain world, where AMMs function almost in reverse. Automated market makers rely on a pool-based pricing formula, where the price itself is a function of the liquidity pool's state, allowing for slippage during large transactions or periods of low liquidity. Coupled with delays from block confirmation times, it's difficult for each on-chain transaction to match and lock in the NBBO at the moment of occurrence, let alone instantly recalculate routing paths when better external quotes are found, as traditional routing would do. One side demands “no transactions below the NBBO” and “no locking/crossing quotes,” while the other allows prices to continuously adjust based on pool conditions, even experiencing extreme fluctuations within the same block, leading to a structural conflict rather than mere technical details. Alex Thorn points out that Section 611 has become one of the largest structural barriers to trading tokenized U.S. stocks in DeFi — once tokenized stocks are viewed as NMS stocks, they are required to meet order protection and locking/crossing quote restrictions, yet cannot naturally align with the NBBO on AMMs, becoming stuck in the gap between “compliance not allowing you to trade” and “mechanism not allowing you to comply,” remaining long under the shadow of regulatory red lines.
Behind the SEC's Easing: A Bet on Market Structure and Innovation
If we pull our focus away from the tokenization narrative back to the document itself, we can see that the SEC's target for this intervention is quite restrained: it points to Section 611 and Section 610(e) under the Regulation NMS framework, with the proposal focusing on structural adjustments to the “national market system,” rather than establishing a new rule exclusively for on-chain assets. After entering the approximately 60-day public comment period, the first stakeholders allowed to voice their opinions are the exchanges, market makers, brokers, and other traditional market participants. Mainstream interpretations generally suggest that the SEC's more direct motive is to reduce trading execution costs within the existing NMS system, relaxing some hard constraints on quoting formats, thereby allowing space for competition among different trading venues, completing a “modernization” project for the U.S. stock market rather than customizing a pathway for any specific new type of asset.
The true force binding this market structure reform to the on-chain world comes from the industry's own bets. Alex Thorn refers to the proposal to revoke Section 611 as a “major unlocking for tokenized U.S. stocks / NMS stocks in DeFi,” while multiple Chinese crypto media outlets used phrases like “clearing key obstacles,” elevating the expectations up to the integration of TradFi and DeFi. In these interpretations, tokenized stocks and related DeFi trading are seen as marginal beneficiaries of this deregulation: once the hard requirements of order protection and locking/crossing quotes are removed, the most acute structural conflict between AMM and NMS stocks has the opportunity to be mitigated. However, it must be emphasized that these remain at the level of market-level forecasting and expectations. The SEC has not committed to creating a special path for tokenized securities in the proposal; regarding whether Rule 600 and other key definitions will be adjusted in parallel, and whether broker-dealer “best execution” obligations will reshape price protection, and how the accompanying rules will ultimately land, all of these are still up for debate during the public comment and negotiation process.
After Easing Rules: A New Compliance Path for Tokenized Stocks
If the SEC ultimately formally revokes Sections 611 and 610(e) as proposed, the so-called “one of the biggest structural obstacles for trading tokenized U.S. stocks in DeFi” as referred to by Alex Thorn may be dismantled: on-chain AMMs would no longer need to align with the NBBO for price protection, and the technical shortcomings that prevent real-time comparison of the national best bid and ask prices would no longer inherently constitute a “violation structure.” For projects looking to set up on-chain U.S. stock liquidity pools, this means that pricing can revert to the AMM's own pool curve and slippage mechanisms, which has been seen by many studies and media as a key step towards “unlocking” the liquidity of tokenized U.S. stocks.
However, the removal of order protection does not equate to tokenized stocks entering a regulatory vacuum. Research briefs have pointed out that even if Section 611 is no longer applicable, on-chain trading of tokenized stocks will still need to navigate the full set of compliance requirements related to exchange or ATS registration, clearing and settlement arrangements, as well as ongoing disclosure, and these thresholds will not magically disappear because one NMS rule was revoked. More importantly, the SEC's actions fundamentally reserve space for structural adjustments within the entire national market system for U.S. stocks, rather than handing out a “blanket pass” for tokenized stocks or DeFi platforms. As the proposal remains in the approximately 60-day public comment phase with final rule texts and accompanying adjustments not yet determined, how far the path can actually extend depends on whether platforms and project teams can intricately design compliant pathways that both accommodate on-chain liquidity and navigate existing licensing and clearing boundaries within this new market structure gap.
With the Removal of Price Protection: What Should Investors and Platforms Bear?
As the “national unified pricing gate” of Reg NMS Section 611 is proposed for revocation, investors have habitually relied on a set of structural protections enshrined in federal rules: no trading center is allowed to execute trades at prices inferior to protected quotes from other exchanges, especially the national best bid and ask prices (NBBO). The research brief's judgement is that once this mandatory cross-exchange price protection mechanism ceases to exist, price assurance is likely to shift from “hard alignment at the market structure level” to greater reliance on broker-dealers and platforms internally fulfilling similar principle obligations like “best execution.” However, this is just one of the current speculations listed as “pending verification,” and there is no publicly available official alternative framework regarding whether broker-dealer best execution obligations will fill the gap, and how that might be specifically designed. There is already debate within the industry over whether to completely abandon the price protection mechanism; regulators and the market are clearly still tugging between “letting prices move freely” and “ensuring a safety net for end investors,” indicating that for the foreseeable future, investors need to proactively examine how their brokers and trading platforms route orders and explain price variance risks, rather than simply assuming “the system will block out obviously inferior prices for me.”
For users of on-chain tokenized stocks, the loosening of structural protections overlaps directly with the pricing mechanisms existing in DeFi. Automated market makers rely on pool-based pricing, slippage curves, and block time confirmations, which already create structural conflicts with the traditional order protection that aligns with the NBBO. Once federal-level price protection is weakened, the impacts of price slippage, cross-market price differences, and information asymmetry on end investors will be further magnified: there is allowed to be a greater divergence between on-chain tokenized stocks and NMS spot prices, and liquidity being fragmented further between on-chain and off-chain trading venues across different jurisdictions leaves more operational scenarios for “regulatory arbitrage” and cross-border regulatory blind spots. The result is that users of tokenized U.S. stocks no longer only have to measure “whether there is liquidity on-chain,” but are compelled to judge how much loss they are willing to bear for cross-market price differences, while the question of who will be responsible for the price jump is quietly shifting from federal rules themselves to the contract terms of each platform, project, and signed investors.
60 Days of Negotiation: Who Will Rewrite the Boundaries of Tokenized U.S. Stocks
From the regulatory text, the SEC's proposal to revoke Sections 611 and 610(e) of Reg NMS seems more like “opening a window” for tokenized U.S. stocks and DeFi platforms, rather than granting an immediate pass. The public comment period, starting June 12, 2026, provides an unusual opportunity for traditional exchanges, market makers, brokers, and RWA project teams to engage directly: they can compete over whether the boundary for deregulated order protection will be drawn in off-chain matching rooms or partially extend to on-chain AMM pools before the national market system rules are finalized. However, the outcome of this negotiation is uncertain — the final rules might advance along the current proposal's direction, undergo significant revisions under controversial pressure, or even be shelved altogether; vital designs regarding whether to adjust Rule 600 definitions in parallel, and whether to use broker-dealer “best execution” as a core alternative framework are still marked as “pending verification” in the research briefs. More realistically, even if Section 611 is relaxed, tokenized stocks will still face multiple regulatory obstacles such as exchange or ATS registration, clearing, and settlement requirements; whether these old frameworks will be rewritten in future discussions does not have a timeline. Multiple media outlets and research institutions have already viewed this proposal as a key turning point for the fusion of traditional securities regulation and the crypto industry. However, for platforms, projects, and users alike, it first signifies a period of observation: in the window where rules have yet to take effect and constraints remain intact, whoever can first reconstruct their compliance framework and business model on the assumption of a “post-order protection era” is more likely to find themselves on the inside of the new boundaries for tokenized U.S. stocks when the next version of regulatory text actually lands rather than being blocked from entry.
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