The SEC's proposal to scrap key National Market System (NMS) rules is being hailed by analysts as a significant catalyst for tokenized US stocks, potentially unlocking large-scale trading in decentralized finance. Galaxy's Thorn noted that the current regulations have prevented DeFi automated market makers from handling these assets efficiently.
Tokenized stocks represent real-world equities minted on blockchain networks, allowing for 24/7 trading and composability with DeFi protocols. The NMS rules, originally designed to ensure fair access and transparency in traditional markets, have inadvertently created barriers for automated liquidity pools that lack human intermediaries.
The regulatory shift would remove compliance burdens that forced DeFi platforms to either avoid tokenized equities or operate in legal gray areas. Analysts argue this aligns with the SEC's broader push to modernize market infrastructure while acknowledging the growing intersection of traditional finance and blockchain.
For the crypto market, tokenized stocks remain a niche but fast-growing sector, with platforms like Ondo Finance and Backed tokenizing US treasuries and equities. The proposal could spur competition among DeFi protocols and attract institutional capital seeking regulated on-chain exposure.
However, critics warn the move may reduce protections against market manipulation, and the rule change's final approval process remains uncertain. The SEC has not signaled a timeline, and industry participants caution that implementation details could temper the initial enthusiasm.