For twenty years, a single technical rule kept blockchain away from US stocks. Rule 611 — adopted as part of Regulation NMS in 2005 — mandates that any trading venue must block an order execution if a better price is displayed elsewhere. On June 12, the SEC proposed scrapping it.
For traditional exchanges, Rule 611 is workable. NYSE and Nasdaq can route orders between venues in milliseconds. But for automated market makers (AMMs) — the liquidity pools at the heart of DeFi — it's structurally incompatible. AMMs execute along bonding curves and cannot pause a swap because Nasdaq shows a tighter quote somewhere else. Alex Thorn of Galaxy Digital put it plainly: "An AMM cannot comply with 611 by construction."
Without Rule 611, broker best-execution obligations under FINRA Rule 5310 would take its place. That's a principles-based standard, not a mechanistic routing requirement — and one that AMMs can actually satisfy. Thorn described the proposal as "one of the biggest unlocks yet for tokenized stocks."
SEC Chairman Paul Atkins framed the move as simplifying market structure and reducing costs, leaving space for competition to shape what comes next. A 60-day public comment period follows Federal Register publication. Final adoption isn't expected before Q1 2027.
Removing the rule doesn't dissolve every remaining obstacle. Exchange registration, clearance and settlement infrastructure, shareholder rights on chain — these remain open questions. But Rule 611 was the prerequisite problem, the one that made the entire concept of DeFi-based US equity trading structurally broken from the start. That particular wall is now being taken down.
