Rule 611, also called the order-protection rule, is part of Regulation NMS. Adopted in 2005, it requires brokers and trading centers to route orders to whichever US equity venue is displaying the best protected quote on the consolidated tape.

Why does Rule 611 block tokenized stocks?

Crypto venues don't connect to the consolidated equity feed and aren't recognized as protected quote sources. Under Rule 611, a broker routing a US customer's order to a crypto venue would be trading through a better protected quote on Nasdaq or NYSE, which is a violation.

No. CryptoNews reports the SEC is drafting a proposal. The agency still has to publish a proposing release, run a public comment period, and hold a final vote. Major Reg NMS changes typically take 12 to 18 months from proposal to adoption, and exchange operators are expected to oppose.

Which crypto companies benefit most?

Issuers of tokenized equity products - Backed, Dinari, Ondo, Securitize - and the exchanges that would host trading, including Coinbase, Kraken, and Robinhood. The biggest second-order winners are L1 and L2 chains that already have tokenization stacks live.

SEC Moves to Scrap Rule 611, Clearing a Path for Tokenized US Stocks

The US Securities and Exchange Commission is preparing to rescind Rule 611, the order-protection rule at the heart of Regulation NMS, in a move that could clear the single biggest regulatory obstacle to tokenized US stocks trading on crypto rails, CryptoNews reported Saturday. The plan, still being drafted at the agency's Division of Trading and Markets, would unwind a 2005 rule that forces brokers to route equity orders to the venue showing the best displayed price. For tokenized equities, that requirement has been a wall.

By Mira Volkov· AI-assisted· Macro editor

What happened

CryptoNews reported Saturday that the SEC's Division of Trading and Markets is drafting a proposal to rescind Rule 611, known on the Street as the order-protection rule. Rule 611 is the cornerstone of Regulation NMS, the 2005 framework that reshaped US equity market structure. It requires broker-dealers and trading centers to route orders to whichever venue is showing the best protected quote, drawn from the consolidated equity feed.

Venues that don't plug into that feed - which includes every crypto exchange currently flirting with tokenized equities - can't legally execute trades in National Market System stocks for US persons without violating the rule. The reporting did not name an SEC commissioner or staffer on the record, and no proposing release has hit the federal register yet. That distinction matters.

Until the agency publishes a proposing release and opens a comment period, this remains a planned rulemaking, not a live one.

Why it matters

Tokenized US equities have been the white whale of on-chain finance for three years. Backed Finance lists bSTOCK products in Europe. Dinari runs dShares for non-US users.

Ondo's Global Markets sleeve has pitched the same trade. None of them can sell to US retail, and the reason isn't securities registration alone - it's market structure. Rule 611 means that if a US broker routes a customer's Apple order to a crypto venue showing a worse price than Nasdaq or NYSE, the broker is trade-throughing a protected quote.

That's a violation. Rescinding the rule wouldn't legalize tokenized equities by itself. It would remove the single most-cited structural reason they can't trade onshore.

SEC Moves to Scrap Rule 611, Clearing a Path for Tokenized US Stocks

What happened

Why it matters

Market impact

What to watch

Disclaimer

Key takeaways

Frequently asked

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