SEC Plans Policy to Allow Tokenized Stock Trading

The U.S. Securities and Exchange Commission moved on June 11, 2026 to dismantle two foundational market-structure rules that analysts had identified as the primary regulatory obstacles to crypto-native trading of tokenized equities, a step that arrived weeks after the agency had already approved Nasdaq's tokenized securities trading proposal and issued formal definitional guidance on the asset class. The rule changes, combined with prior approvals, constitute the most concrete sequence of SEC actions yet on equity tokenization. On June 11, the SEC formally proposed to rescind Rule 611 of Regulation NMS — the trade-through prohibition that has governed stock order routing since 2005 — and Rule 610(e), which bans locked and crossed quotations. The SEC proposed removing both provisions from its National Market System framework, where they had governed order protection standards and exchange quote displays. The proposal is now open for a 60-day public comment period before the agency moves toward a final rule. The action sits inside the SEC's broader Project Crypto initiative, launched in August 2025 to modernize the regulatory framework for digital assets and blockchain technology in U.S. markets. Galaxy Digital's head of research Alex Thorn described the Rule 611 rescission proposal as "one of the biggest unlocks yet for tokenized stocks," characterizing the rule as "one of the biggest structural barriers to tokenized US equities trading in DeFi". The comment reflects a widely held view among market participants that Regulation NMS order-routing mandates are structurally incompatible with automated market maker protocols used on decentralized platforms, where continuous price discovery does not map onto the traditional best-execution routing framework. The June 11 proposal followed a sequence of SEC actions stretching back several months. In January 2026, the SEC's Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets issued a joint statement establishing that tokenized securities guidance applies existing federal securities law to any financial instrument whose ownership record is maintained on a crypto network, regardless of its blockchain format. That statement drew a taxonomy between securities tokenized by or on behalf of issuers and those tokenized by unaffiliated third parties — a distinction with direct implications for shareholder rights and disclosure obligations.

In March 2026, the SEC approved Nasdaq's proposal to allow certain securities to trade in tokenized form. Under that framework, tokenized shares trade alongside traditional shares on the same order book and at the same price, carry identical rights, use the same ticker and CUSIP, and follow existing market rules. Nasdaq had filed for regulatory permission in September 2025 and subsequently announced a partnership with crypto exchange Kraken to distribute tokenized stocks globally. The Nasdaq tokenized securities approval established the first SEC-sanctioned venue for on-chain equity trading under the existing regulatory perimeter.

The June 11 rule proposal goes further by addressing the structural impediments that the Nasdaq approval left intact. Rule 611's order-protection mandate requires trading venues to route orders to the national best bid and offer, a requirement that decentralized exchange protocols cannot satisfy by design. Removing that obligation would allow tokenized equity trading on blockchain-based venues to proceed without triggering trade-through violations — a prerequisite for any meaningful DeFi-native equity market. The SEC Rule 611 rescission proposal drew immediate commentary from institutional analysts as the most consequential single regulatory change for on-chain equity infrastructure to date.

The regulatory sequence has coincided with accelerating institutional infrastructure development. Nasdaq announced it was developing a framework for publicly listed companies to issue blockchain-based versions of their shares and teamed with Kraken for global distribution. The 60-day comment period on the Rule 611 and Rule 610(e) rescission closes in mid-August 2026, after which the SEC would proceed toward a final rule.

Several material questions remain unresolved by the current regulatory record. The June 11 proposal does not specify which categories of crypto firms would qualify to operate tokenized equity trading venues, what capital or custody requirements would apply, or how cross-border distribution of tokenized U.S. equities would be supervised. The proposal does not address clearing and settlement finality for on-chain equity transactions, the treatment of corporate actions such as stock splits and dividends on tokenized shares held outside the Nasdaq-approved framework, or the liability regime for third-party tokenizers who issue synthetic representations of equities without issuer authorization. The comment period will determine whether the final rule addresses those gaps or defers them to subsequent rulemaking.

The immediate effect of the June 11 proposal is to open a formal public process for removing the two Regulation NMS provisions most cited as barriers to decentralized tokenized equity trading. The proposal does not authorize any specific crypto firm to operate a tokenized stock trading venue, does not establish the capital, custody, or operational standards such firms would need to meet, and does not resolve the regulatory treatment of third-party tokenized equity products that fall outside the issuer-sponsored framework the SEC defined in January 2026.

SEC Plans Policy to Allow Tokenized Stock Trading

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