The Blockchain Association is pushing the SEC to scrap two old market-structure rules, arguing they were built for a stock market era that blockchain is trying to replace, not the one taking shape around tokenized securities and onchain settlement.
- Targets: Regulation NMS Rules 611 and 610(e)
- Core argument: displayed price should not be the only thing that matters
- Big risk: weaker investor protection if best execution gets fuzzy
On Aug. 18, the Blockchain Association said it submitted a comment letter urging the U.S. Securities and Exchange Commission to rescind Regulation NMS Rules 611 and 610(e). The SEC, not the industry group, is the body that actually proposed the change, and it has not finalized anything yet.
The filing lands in the middle of a much bigger fight over how U.S. equity markets should work when trades can execute, record ownership, and settle on blockchain rails. That is not just a crypto talking point. If the SEC moves forward, the effects would reach national market system stocks generally, along with conventional exchanges, alternative trading systems, brokers, and market makers.
Rule 611, known as the Order Protection Rule, generally prevents trades in NMS stocks from being executed at a price worse than a protected quotation displayed elsewhere, subject to exceptions. Rule 610(e) addresses locked and crossed quotations. A locked market is when the best bid equals the best offer. A crossed market is when a bid is higher than an available offer. In plain English: these rules are meant to keep visible prices orderly and stop venues from playing games with the tape.
That framework is not new. Rule 611 was adopted in 2005, back when U.S. market structure was still built around a different set of assumptions about speed, routing, and how trades should be measured. Today, the Blockchain Association says that looks outdated.
Its argument is straightforward: trading systems are faster, more automated, and more interconnected than they were two decades ago. The group says public blockchains can enable “24/7 trading, faster settlement, greater transparency, interoperability, and new models for executing trades.” In tokenized markets, the association argues, execution and settlement can be tightly linked in ways that make a narrow focus on displayed price less useful than it once was.
There is a real logic to that view. A trade is not “cheap” just because the screen flashes the best quote. Fees matter. Execution certainty matters. Settlement speed matters. Counterparty exposure matters. Liquidity matters too. If a market can settle faster and reduce some plumbing risk, that has value beyond the last decimal place on a quote grid.
But the counterargument is just as real: if you weaken rules that protect displayed prices without replacing them with something solid, you can make markets less fair while calling it modernization. That is how finance often sells a downgrade with nicer branding.
SEC Commissioner Mark Uyeda has already signaled those concerns. According to the remarks summarized in the notes, he said removing the rules would raise questions about “best execution, transparency, trading mechanics and investor confidence.” That is not bureaucratic hand-wringing. It goes to the core of how brokers are supposed to treat customer orders.
Best execution means a broker must seek the most favorable terms reasonably available for a customer’s order. It is not a slogan. It is one of the main safeguards that keeps routing decisions from becoming a quiet hustle disguised as efficiency. If Rule 611 and Rule 610(e) are changed, best-execution standards become even more important and potentially much harder to police cleanly.
Chairman Paul Atkins has said the review is intended to simplify market structure and reduce costs. That may be the goal. It is not a proven outcome. The SEC has not established that rescinding these rules will automatically create cleaner, cheaper, or more competitive markets.
The proposal itself is also more limited than some of the hype around it suggests. The SEC is not scrapping all of Regulation NMS. The Federal Register text says other provisions would remain in place for now. This is a targeted overhaul, not a full demolition of the U.S. equities rulebook.
That distinction matters because Regulation NMS sits at the center of how fragmented U.S. stock markets route orders, display quotes, and measure execution quality. Change the rules here and you do not just alter one compliance box. You change how brokers justify trades, how market makers quote, how venues compete, and how investors understand whether they got a fair fill.
The tokenization angle is what makes this fight interesting, but it is not the whole story. The SEC proposal applies to national market system stocks generally, not just crypto-native products. So yes, tokenized securities are part of the backdrop. But conventional equity markets would also feel the impact if the rescission goes through.
That is why the letter from the Blockchain Association is notable. It is not asking tokenized securities to escape federal securities laws. Tokenized securities generally remain securities under U.S. law, even if recordkeeping and transfer rails move onto a blockchain. The ask is narrower and more practical: update the market-structure rules so blockchain-based systems are not forced into a mold built for older exchange plumbing.
There is a plausible case for that. There is also a plausible case against it. If blockchain-based markets really do offer faster settlement, greater interoperability, and cleaner execution, then rigid trade-through and quote-display rules could become a drag. If, on the other hand, “innovation” turns into a convenient excuse to water down investor protections, the result will be less progress and more expensive nonsense with a web3 sticker slapped on it.
FINRA is separately accepting comments through Sept. 25 on possible changes to its best execution guidance. That matters because if the SEC weakens or removes these rules, the standards around execution quality will become the next battleground. The plumbing cannot be ripped out first and the manual written later.
The public examples being discussed around tokenization, including activity involving Ondo Finance, BlackRock, Micron, Kraken, xStocks, Ethereum, and Solana, point to a broader shift: blockchain is no longer just about speculative coins. It is increasingly being used to represent real-world financial assets. That still does not make the legal framework disappear. It just means the market is testing whether older rules fit new rails.
For now, the SEC has not announced a final vote date. Staff will review the comments, and the Commission could adopt the proposal, modify it, or leave the current rules in place. Any final rescission would still need another Commission vote, publication in the Federal Register, an effective date, and whatever transition requirements the agency decides are necessary.
In other words, the argument is live, but the outcome is not. That is the part worth keeping an eye on, not the tokenization buzzwords, not the abstract talk about modernization, but the basic question of whether U.S. markets can safely shed rules written for a different era without opening the door to worse execution dressed up as progress.
Key questions and takeaways
-
What is the Blockchain Association asking the SEC to do?
It wants the SEC to rescind Regulation NMS Rules 611 and 610(e), arguing they were built for older stock-market plumbing and do not fit tokenized or blockchain-based trading very well. -
What does Rule 611 do?
Rule 611, the Order Protection Rule, generally blocks executions in NMS stocks at prices worse than protected quotations elsewhere, subject to exceptions. -
What does Rule 610(e) do?
It addresses locked and crossed quotations, which are market conditions where the best bid equals or exceeds the best offer in ways regulators try to prevent. -
Is this only about crypto?
No. The proposal applies to national market system stocks generally, so the effects could reach conventional exchanges, brokers, market makers, and alternative trading systems. -
Why are critics uneasy?
Because removing these rules could weaken best execution, transparency, and investor confidence if the SEC does not replace them with a clear and workable framework. -
Has the SEC made a final decision?
No. The proposal is still under review, no final vote date has been announced, and neither rule has been repealed.
The real issue is not whether blockchain is flashy. It is whether regulators can modernize market structure without turning investor protection into collateral damage. If the SEC gets this wrong, the market will not become freer or fairer, it will just become easier to game.
Further reading
A few source docs and related notes if you want to keep digging into the market-structure mess.
- Blockchain Association urges SEC to drop 2 trading rules
- The Trade-Through Rule and Locked and Crossed Markets
- Federal Register notice on the Trade-Through Rule and Locked and Crossed Markets provisions
- SEC comment letter PDF on S7-2026-20
- Skadden analysis on the SEC’s proposal to rescind Regulation NMS trade rules
- SEC reworks CAT audit trail as market structure changes could affect tokenized securities
- NYSE tokenized securities claim unverified as SEC reaffirms crypto market rules
- Injective says it filed for SEC transfer agent registration to put tokenized securities onchain
