SEC proposes scrapping trade-through rule that blocked DeFi equity listings. Coinbase and Galaxy Digital see a path for tokenized stocks in the U.S. market.
The SEC formally proposed scrapping a decades-old market rule that could reshape how tokenized equities trade in the U.S.
The agency wants to repeal the "trade-through" rule, which requires brokers to route orders to the exchange displaying the best quoted price. The rule has kept DeFi platforms from listing U.S. equities without legal risk, because matching orders on a tokenized venue would effectively violate the requirement to seek the best price on every trade.
SEC Chairman Paul Atkins said the rule prioritizes outdated price-matching metrics over modern liquidity and execution needs. Two SEC commissioners dissented, arguing the change rewrites market rules to suit an industry that failed to fit legacy frameworks.
The proposal comes as the NYSE and Nasdaq build their own blockchain-based trading venues. Galaxy Digital and Coinbase called the change one of the biggest unlocks for tokenized real-world assets. Coinbase recently announced plans to launch tokenized stock trading outside the U.S., letting investors hold 1:1 backed shares on-chain. The regulatory shift suggests a path for those innovations to reach the domestic market, several crypto-industry lawyers said.
Critics argue the SEC is bending market structure rules to accommodate an industry that struggled to comply with existing requirements. The two dissenting commissioners said the proposal removes investor protections without clear evidence of benefit.
The repeal would let broker-dealers match orders on alternative venues – including blockchain-based platforms – as long as they meet best-execution standards determined by the broker itself, rather than a mandatory price-comparison rule. That framework aligns with how tokenized equities work: orders settle against on-chain records outside the NMS price-feed system.
A public comment period runs 60 days. The SEC expects a final vote before year-end. If passed, the change would remove the primary legal barrier to U.S.-regulated tokenized equity trading, which has so far been limited to offshore or exempt markets.
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