As part of its regulatory reform, the SEC has proposed repealing key provisions of Regulation NMS, specifically Rule 611 (Order Protection Rule) and Rule 610(e). Investment bank Benchmark has identified this as the most influential shift in U.S. crypto regulation this year. Let's examine why this measure is significant and what impact it might have on the real-world asset (RWA) and DeFi ecosystems.

The existing Rule 611 has mandated order routing based on the National Best Bid and Offer (NBBO) system. This structure has been fundamentally incompatible with automated market makers (AMMs) or decentralized trading environments that process specific assets algorithmically in on-chain pools. In other words, even if traditional stocks were brought onto the blockchain and tokenized, there were structural barriers that made free trading on-chain impossible under existing regulations.

If this amendment passes, shifting from a rules-based mandatory path to a principles-based 'Best Execution' regime, the landscape will change. On-chain financial infrastructure companies like Securitize—a partner for BlackRock’s BUIDL—as well as Coinbase and Galaxy Digital, are likely to benefit. This would pave the way for new financial models that trade tokenized stocks on public blockchains and integrate them directly with DeFi protocols.

However, some urge caution, suggesting that the market is unlikely to see immediate, drastic changes. A mountain of detailed regulatory hurdles remain to be addressed, including Alternative Trading System (ATS) and exchange registration processes, clearing and settlement protocols, and the establishment of on-chain custody frameworks. Concrete innovation exemptions for DeFi platforms have also yet to be fleshed out.

While the direction of the policy is clear, the path from actual implementation to market stabilization appears to require a long-term process of refining the fine-print regulations.