Blockchain Association Urges SEC to Scrap Trading Rules for Tokenized Markets

Highlights:

• The SEC is considering removing two rules that affect how U.S. stock trades work.
• The Blockchain Association says trading rules should reflect how modern markets operate.
• Tokenized securities will still follow U.S. securities laws even if the SEC removes the rules.

The Blockchain Association has urged the SEC today to repeal two Regulation NMS provisions affecting U.S. stock execution. The group backed the proposed removal of Rules 611 and 610(e) through a formal comment letter. The SEC proposed removing both provisions under file number S7-2026-20. However, commissioners have not repealed either rule, and the proposal remains under consideration.

1/ Today, we submitted a comment letter to the @SECGov supporting its proposal to rescind outdated provisions of Regulation NMS – Rules 611 and 610(e).

These rules were built for markets of 2005. It’s time for market structure to catch up with technology. 🧵… pic.twitter.com/f6nEyZa2sP

— Blockchain Association (@BlockchainAssn) August 18, 2026

Rule 611 generally stops trading venues from executing orders at worse prices when another protected market displays a better quotation. The SEC adopted the rule to protect displayed quotations across competing U.S. stock trading venues. Trading centers must maintain procedures that prevent prohibited trade-throughs unless an approved exception applies.

Rule 610(e) addresses locked and crossed quotations across protected markets. A locked market occurs when the highest bid equals the lowest available offer. A crossed market occurs when a trading venue displays a bid above the lowest available offer. The rule requires exchanges and associations to prevent members from displaying quotations that create those conditions.

The Blockchain Association argues that faster and more connected trading technology has changed how markets operate. Tokenized markets can also use different systems for trading securities, recording ownership and settling transactions. Therefore, the group says Rule 611’s focus on displayed prices may not reflect the full outcome of an investor’s trade.

Blockchain Association Backs Broader Execution Standards

The Blockchain Association asked the SEC to consider total execution quality instead of relying mainly on the best displayed quotation. The group says transaction fees, available liquidity and settlement speed can change the total value investors receive from a trade.

The Association said execution certainty and counterparty exposure also influence the overall terms investors receive from securities transactions. Therefore, a different displayed price could still provide better overall terms after fees and other transaction costs.

Some blockchain platforms can execute trades, update ownership records, and settle transactions through connected onchain infrastructure. Traditional securities markets separate trade execution from settlement, while some blockchain systems can connect both processes.

The Blockchain Association asked the SEC to modernize best-execution guidance if commissioners ultimately remove Rule 611. It wants that guidance to account for tokenization, extended trading hours and execution factors beyond displayed prices. Removing Rule 611 would not eliminate brokers’ wider duty to seek favorable execution terms for customer orders.

SEC Commissioner Mark Uyeda also raised concerns about the proposed changes. Uyeda said the SEC must examine potential effects on best execution, transparency, trading mechanics and investor confidence. Tokenized securities would remain subject to federal securities laws even if the SEC removes both provisions.

SEC Considers Its Next Move

The SEC proposed removing Rules 611 and 610(e) from Regulation NMS on June 11. SEC Chairman Paul Atkins said the changes could simplify market rules, lower costs and increase competition. However, some commenters want Rule 611 to remain because they believe it protects investors from worse prices.

After 2 decades of Rule 611, it is high time that the SEC review its unintended consequences that have hindered the long-term growth of our markets.

I look forward to reviewing public input as we take a careful approach to avoid repeating the same mistakes that brought us here. https://t.co/jswyzoox1v

— Paul Atkins (@SECPaulSAtkins) June 11, 2026

The staff will review the public comments before the Commission decides what happens next. The SEC can approve the changes, revise the proposal, or keep the current rules. Meanwhile, any final repeal would require the Commission to vote before the SEC sets an effective date.