Blockchain Association Urges SEC to Scrap Legacy Trading Mandates for Tokenized Assets

Repealing Legacy Rules Onchain Execution Standards Institutional Market Integration

A Push to Rescind Two-Decade-Old Rules

A prominent Washington-based advocacy group, the Blockchain Association, officially submitted a comprehensive comment letter supporting a regulatory overhaul proposed by the U.S. Securities and Exchange Commission (SEC).

Filed at the close of the agency’s public feedback window on August 17, 2026, the submission urges regulatory authorities to formally rescind two foundational components of Regulation National Market System (Regulation NMS): Rule 611 and Rule 610(e).

Originally crafted under file number S7-2026-20 during a June 11 initiative—and subsequently published in the Federal Register on June 17—the SEC’s proposal aims to modernize equities infrastructure.

• Rule 611, famously known as the Order Protection Rule, prohibits trading centers from filling orders at prices inferior to visible top-tier quotations displayed across competing traditional venues.
• Concurrently, Rule 610(e) restricts exchanges from displaying quotations that lock or cross protected bids and offers nationwide.

The industry coalition contends that these rules, enacted in 2005, impose excessive operating friction and fail to align with contemporary, highly automated electronic venues.

Adapting Best Execution to Onchain Settlement

The core argument put forward by digital asset proponents centers on the fundamental differences between conventional equity order books and decentralized financial ledgers. In traditional equity markets, displayed price serves as the primary metric for transaction quality.

However, public blockchain networks unify trading, entitlement tracking, and atomic settlement into a continuous process operating around the clock.

In its filing, the coalition emphasized that rigid price-matching obligations overlook critical transaction factors inherent to distributed ledgers.

Factors such as immediate finality, reduced counterparty risk, protocol liquidity, transaction fees, and operational speed can offer superior value to participants, even if the execution price fluctuates slightly from a legacy exchange ticker.

Consequently, advocates are requesting updated best-execution guidelines, urging regulators to explicitly recognize compliant onchain execution mechanisms as valid pathways to achieving fair market results.

Bridging Institutional Finance and Public Blockchains

The regulatory debate comes amid expanding institutional initiatives aimed at bringing traditional assets onto public blockchain networks.

Entities such as Ondo Finance have developed mechanisms like Ondo Global Markets, recording ownership tokens on public networks like Ethereum while keeping underlying physical equities secure inside traditional broker-dealer custody.

Similar projects, including Kraken’s xStocks and Securitize’s issuance of common equity on Solana and Avalanche during its listing on the New York Stock Exchange, highlight a growing demand for digital market rails.

While SEC officials, including Chairman Paul Atkins, view the proposed rule rollbacks as a way to streamline national market structures, Commissioners Mark Uyeda and Hester Peirce have noted that any shift requires balancing technological innovation with investor protections.

The comment window is now closed, leaving regulatory staff to analyze feedback ahead of a potential final Commission vote.