TL;DR:
- The Blockchain Association submitted a letter to the SEC supporting the elimination of Rules 611 and 610(e) of Regulation NMS.
- Both rules, established in 2005, “failed to achieve their stated objectives” and imposed unnecessary costs for two decades, according to the group.
- The association asked the SEC to recognize that tokenized securities on public blockchains can meet existing regulatory requirements.
The Blockchain Association submitted a formal letter to the U.S. Securities and Exchange Commission (SEC) in support of the proposal to eliminate two rules from Regulation National Market System (NMS) considered outdated, arguing that their rescission would directly benefit the development of asset tokenization.
The rules in question are Rule 611, which requires trading platforms to respect the most favorable quotes available on other markets, and Rule 610(e), which restricts the display of locked or crossed quotes. Both were established in 2005 and, according to the association, “failed to achieve their stated objectives” and imposed substantial and unnecessary costs on market participants for twenty years.
The SEC had proposed in June the elimination of these two rules, noting that the measure could simplify market structure and reduce costs. The public comment period closed on the same Monday the Blockchain Association submitted its letter.
Tokenization on Public Blockchains: the Central Argument
In the letter and in a series of posts on X, the association argued that today’s markets are “faster, more automated, and more interconnected” than in 2005, and that tokenization is accelerating that evolution. “A revolutionary shift is underway today: the representation of traditional assets on public blockchains,” the group stated in the document.
The association also argued that the existing rules “inhibit” the development of tokenized market infrastructure and that the rationale behind their elimination “favors considering multiple factors when evaluating securities transactions, including the benefits of tokenized securities.”
In that context, the group urged the SEC to modernize its best execution standards and to formally recognize that tokenized securities traded on public blockchains can satisfy existing regulatory requirements. “The SEC should recognize the use of an onchain execution mechanism as a valid means of achieving fair and efficient execution,” the letter concludes.
