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Why Galaxy's Thorn Calls SEC Proposal 'Biggest Unlock' for Tokenized Stocks
Galaxy Digital's Alex Thorn says the SEC's proposal to scrap Rule 611 removes a structural barrier that made tokenized stocks nearly impossible in DeFi. The segment's market value has reached $3.5B.
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The SEC moved June 11 to scrap two rules that have governed equity trading for two decades. The proposal targets Rule 611 and Rule 610(e) of Regulation NMS, which together forced every trading venue to check prices against other exchanges before executing a trade.
SEC chair Paul Atkins said the rules had "hindered – rather than enhanced – the long-term growth of our markets." The proposal, he added, is meant to "simplify market structure and reduce costs for market participants while allowing competition, innovation, and other market forces to shape the continuing evolution of our equity markets."
Alex Thorn, head of research at Galaxy Digital, called Rule 611 one of the "biggest structural barriers" to tokenized U.S. equities trading in DeFi. An automated market maker cannot comply with the rule, Thorn said, because it executes against a bonding curve at whatever the pool price is, with slippage, at block-time granularity. Most DeFi pricing depends on capital flows and could easily decouple from the strict price levels the current framework dictates.