Benchmark: SEC NMS Reform May Be the Most Critical Crypto Regulatory Variable This Year

Odaily reports that research firm Benchmark Equity Research has highlighted that the market structure reform proposal put forward by the U.S. Securities and Exchange Commission (SEC) on June 11 could be one of the most far-reaching regulatory actions for the U.S. crypto industry this year. The proposal aims to abolish Rule 611 and Rule 610(e) of Regulation NMS, two core rules that have governed the routing and execution of U.S. stock trades since 2005, which are seen as having long constrained the development of tokenized stocks and on-chain trading.

Rule 611 (Order Protection Rule) requires trading venues to avoid executing trades at prices inferior to "protected quotations" on other markets, thereby enforcing the National Best Bid and Offer (NBBO) system. Rule 610(e) prohibits locked and crossed markets, restricting quotation overlaps and price mismatches.

Benchmark analyst Mark Palmer stated that if the rules are repealed, it would remove key legal barriers hindering DeFi trading models, such as automated market makers (AMMs), allowing them to operate without relying on traditional order routing systems. The regulatory changes would directly benefit infrastructure for tokenized stocks and crypto securities trading, with Securitize identified as the most immediate beneficiary. Additionally, Coinbase and Galaxy Digital could also benefit from the expansion of trading, custody, and market-making businesses.

However, Benchmark also noted that even with looser rules, critical issues such as exchange registration, clearing and settlement, and custody frameworks remain unresolved. The market is still anticipating the SEC's potential introduction of an "innovation exemption" mechanism. The SEC has opened a 60-day public comment period, and Benchmark expects a final vote could take place in early 2027. (The Block)