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The Blockchain Association has filed a comment letter supporting the SEC’s proposal to repeal two Regulation NMS trading rules adopted in 2005. The group argues Rule 611 and Rule 610(e) have failed to achieve their original objectives and have instead imposed substantial unnecessary costs on market participants over two decades. The association contends the rules no longer reflect current market conditions, particularly as tokenized securities on public blockchains gain traction, and that removing them would encourage development of blockchain-based trading systems. The SEC proposed the repeal in June, citing simplification of market structure and lower transaction costs. No final decision has been made, and the rulemaking process is expected to involve an extended comment and review period.
Key Elements
The Blockchain Association, a prominent trade group representing the digital asset industry, has formally endorsed the Securities and Exchange Commission’s proposal to eliminate two long-standing trading rules under the National Market System framework, arguing the provisions have outlived their original purpose and now impose unnecessary costs on market participants.
In a comment letter submitted to the SEC on Monday, the association backed the commission’s June proposal to rescind Rule 611 and Rule 610(e) of Regulation NMS both adopted in 2005 as part of a sweeping overhaul of U.S. equity market structure, were designed to promote competition among trading venues and ensure investors received the best available prices
The Blockchain Association argued that the regulatory landscape has shifted dramatically over the past two decades, and the rules no longer reflect how trading infrastructure is evolving, particularly as blockchain-based settlement and tokenized securities gain traction.
“Rules 611 and 610(e) have not achieved their original objectives,” the association wrote in its submission. “Rather, they have generated substantial and unnecessary costs for market participants over the past 20 years.”
The SEC’s own rationale for the repeal echoes this assessment. The commission has said eliminating the rules would simplify what has become an overly complex market structure and lower transaction costs for participants across the board.
Tokenization at the Center
The association’s comments go beyond generic support for deregulation. They explicitly link the rule change to the growth of tokenized markets, where traditional financial assets such as equities are represented as digital tokens on public blockchains.
“Today’s market has changed significantly since 2005, and tokenization of traditional financial assets on public blockchains is spreading rapidly,” the group stated. It argued that existing rules constrain the development of blockchain-based securities trading systems and that removing them “could have a positive impact on the development of the tokenized securities market.”
The association also urged regulators to broaden their evaluation criteria when assessing securities trading, suggesting that efficiency gains offered by tokenized securities should be weighed alongside price considerations.
This alignment between the SEC’s proposal and the industry group’s position suggests a degree of shared thinking on how legacy rules intersect with emerging market technologies. The Blockchain Association’s comment letter effectively reinforces an initiative the commission has already set in motion, rather than introducing a wholly new demand.
Regulatory Engagement Strategy
The submission reflects a broader shift in how crypto trade groups engage with Washington. Rather than relying solely on litigation or legislative advocacy, organizations like the Blockchain Association have increasingly participated directly in SEC rulemaking processes, submitting formal comments on specific technical proposals.
This approach allows industry advocates to shape how new technology is treated under existing securities law, and the association has positioned itself as a recurring voice in SEC discussions tied to digital assets.
| Rule | Year Adopted | Purpose | Association’s Position |
|---|---|---|---|
| Rule 611 (Order Protection Rule) | 2005 | Prevent trade-throughs by requiring orders be routed to best-priced venue | Outdated; creates unnecessary costs |
| Rule 610(e) (Access Rule) | 2005 | Promote fair access to market data and trading venues | No longer reflects current market structure |
Note: Both rules are part of Regulation NMS, adopted by the SEC in 2005 to modernize U.S. equity market structure.
What Comes Next
The SEC has not finalized action on the proposal, and the rulemaking process typically involves an extended comment and review period. Other market participants, including traditional exchanges, broker-dealers, and technology firms, will have opportunities to weigh in before the commission moves toward a final decision.
The practical impact on trading volumes or specific asset classes remains uncertain until the SEC issues a final ruling. Near-term market effects are expected to be limited while the process unfolds.
If the rules are ultimately removed, market structure could shift to more directly accommodate tokenized trading products alongside conventional securities. Supporters argue this would reduce regulatory ambiguity for firms building tokenization infrastructure, potentially encouraging further investment in the space.
The Blockchain Association’s endorsement adds industry weight to an SEC proposal already in motion, underscoring how tokenization has become a recurring reference point in market structure debates. The rule change’s fate now depends on the commission’s broader rulemaking timeline.
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Source: finance.biggo.com