The Blockchain Association has formally backed a U.S. Securities and Exchange Commission proposal to repeal two longstanding equity market rules, contending that the measures no longer suit modern trading systems and could hinder the growth of tokenized securities on public blockchains.

In a comment letter submitted near the close of the public comment period, the industry group urged the SEC to proceed with rescinding Rules 611 and 610(e) of Regulation National Market System. The proposal, issued in June 2026 under file number S7-2026-20, also calls for related definitional updates and conforming changes elsewhere in the regulation. The formal comment window closed on August 17.

Rules Adopted Two Decades Ago

Rule 611, known as the Order Protection Rule, generally bars a trading venue from executing an order at a price inferior to a protected better-priced quotation displayed on another market. Rule 610(e) restricts national securities exchanges and certain other venues from displaying quotations that lock or cross protected quotations elsewhere. A locked market occurs when the best bid equals the best offer; a crossed market arises when the best bid exceeds the best offer.

Both provisions formed part of the broader Regulation NMS framework adopted in 2005. At the time, regulators aimed to promote intermarket competition and protect displayed prices across a fragmented equity marketplace. The Blockchain Association argued that the rules have not delivered on their original aims and have instead created substantial ongoing costs for market participants.

SEC Chair Paul Atkins has described the proposal as a step toward simplifying U.S. equity market structure, lowering costs, and giving greater room for competition and technology in order execution. Commissioner Mark Uyeda noted that removing the rules would raise questions about best execution, transparency, trading mechanics, and investor confidence, areas the agency invited commenters to address.

Tokenization and Changing Market Technology

The association’s letter placed particular weight on technological advances since 2005. Markets have grown faster, more automated, and more interconnected, it said, while blockchain-based infrastructure has opened new methods for issuing, transferring, and settling securities. Tokenization—the representation of traditional assets as digital tokens on public blockchains—has accelerated that shift.

According to the group, the existing rules can interfere with the development of markets that execute and settle securities directly on public blockchain networks. The association maintained that execution quality should consider more than the displayed price alone. Features such as settlement speed, transaction costs, certainty, liquidity, counterparty exposure, transparency, interoperability, and continuous trading may also matter to investors.

Public blockchains, the letter stated, can support 24/7 trading, faster settlement, greater transparency, interoperability, and new models for executing trades. The association asked the SEC to modernize its approach to best execution obligations—rules requiring broker-dealers to seek favorable terms for customer orders—and to recognize that transactions completed through public networks can satisfy securities requirements.

The group did not request an exemption from federal securities laws for tokenized products. Instead, it argued that compliant onchain systems should be able to meet regulatory duties through methods suited to the technology. Recording a security interest on a blockchain does not alter the legal status of the underlying asset under existing law.

Broader Market Structure Implications

Any final rescission would apply to national market system stocks generally, affecting conventional exchanges, alternative trading systems, brokers, and market makers, not solely blockchain-based platforms. Without Rule 611, venues could gain flexibility in routing and execution. Critics of the proposal have raised concerns that investors might more frequently receive trades at prices inferior to better displayed quotations elsewhere, and that greater reliance on brokers’ best-execution judgments could introduce new conflicts.

The Blockchain Association took the opposite view, asserting that a rigid focus on displayed price can limit investor choice of venues offering faster settlement, lower total costs, or other advantages. The proposing release itself examines both potential benefits and risks of the changes.

The SEC has not yet scheduled a vote on a final rule. Staff will review the submitted comments before recommending whether to adopt the rescission, modify the proposal, or retain the existing provisions. Any final action would require another Commission vote, Federal Register publication, and an effective date with any necessary transition arrangements.

The association’s filing arrives amid continued industry efforts to develop regulated tokenized securities structures that keep underlying assets within conventional custody and transfer-agent frameworks while issuing blockchain-based representations. Those projects have tested models intended to operate inside the existing securities system rather than outside it.

By supporting the removal of the two 2005 rules and urging recognition of onchain execution, the Blockchain Association positioned the proposal as consistent with efforts to update market structure for contemporary technology, including digital asset infrastructure.