The Securities and Exchange Commission (SEC) is moving to dismantle a stock-trading rule that has governed Wall Street for two decades.

On June 11, the agency submitted a proposal that would rescind Rule 611 of Regulation NMS, the trade-through rule that requires trading centers to prevent stock trades from executing at prices worse than protected quotes displayed elsewhere. It would also eliminate Rule 610(e), which restricts locked and crossed quotations, along with related definitions.

For most of Wall Street, the proposal is a market-structure fight over routing, exchanges, wholesalers, displayed quotes, and execution quality.

For crypto firms and banks exploring tokenized shares, it is something more specific: the SEC is targeting one of the rules that made blockchain-based stock trading difficult to reconcile with the national market system.

A rule built for routed markets

Rule 611 was adopted in 2005 as part of Regulation NMS, a broad overhaul of US equity-market rules. The goal was to protect investors from having their orders executed at inferior prices when a better displayed quote was available on another exchange.

In practice, that system tied stock trading to the National Best Bid and Offer (NBBO), the best displayed bid and offer across protected venues. Broker routers, exchanges, and trading firms built systems around that obligation.

However, that framework is harder to apply to automated market makers (AMMs), the software-based trading pools that power much of decentralized finance.

AMMs do not work like Nasdaq, NYSE, or Cboe. They price trades through liquidity pools, bonding curves, slippage, and block-time execution.

Alex Thorn, Galaxy Digital’s head of research, pointed out that the rule was one of the largest structural barriers to DeFi-based trading of tokenized equities.

“An AMM cannot comply with 611 by construction,” Thorn said. It executes against a bonding curve at the pool price, with slippage and block-time granularity.

The issue is not simply a technical inconvenience. An on-chain pool cannot easily route intermarket sweep orders, ingest consolidated market data with the latency guarantees expected in US equities, or halt a swap because a better quote briefly appears on Nasdaq.

Under the current framework, a pool trading a tokenized version of an NMS stock could repeatedly print prices that differ from protected off-chain quotes. That creates the risk that the pool would be viewed as constantly violating the trade-through rule or functioning as an unlawful trading center.

Rule 610(e) raises a related problem. AMM prices can drift as liquidity shifts and trades move through a pool. That means on-chain prices could lock or cross the displayed NBBO, something current market rules are designed to prevent.

Why crypto sees an opening

Tokenized stocks are blockchain-based representations of company shares or share-linked claims. Supporters argue they could allow around-the-clock trading, fractional ownership, faster settlement, collateral mobility, and broader international access.

The market has been small compared with traditional equities, but interest has increased as banks, crypto exchanges, and asset managers look for ways to bring regulated financial instruments onto public or permissioned blockchains.

Christopher Perkins, chief executive of 250 Digital Asset Management, said Regulation NMS and the NBBO have been among the biggest obstacles to unlocking tokenized equities. If Rule 611 is rescinded, he said, “it’s a whole new ballgame.”

He added:

“Major unlock for DeFi. Incumbents won’t be happy.”

That reaction reflects a view spreading among digital-asset firms: tokenized equities do not need a technological breakthrough as much as a regulatory pathway. Securities are already largely electronic.

In the US, ownership is recorded through a system of depositories, brokers, and transfer agents. Tokenization would change the ledger and settlement architecture, not the economic concept of a share.

The harder question is whether that new architecture can satisfy the obligations embedded in securities law and market-structure rules.

That is where the SEC proposal becomes important. If the trade-through rule is rescinded, the focus would likely shift more heavily toward best execution, the broker-dealer obligation to use reasonable diligence to obtain favorable terms for customers under prevailing market conditions.

Indeed, Thorn said that the framework is more compatible with blockchain trading than a per-trade NBBO protection requirement. A broker routing to an on-chain pool could review execution quality over time, compare venues, and document its routing process.

He said:

“That framework can accommodate an AMM. The old one never could.”

A broader market-structure fight

Meanwhile, the proposal also reaches beyond tokenized shares.

Max Resnick, lead economist at Anza, a Solana-focused development firm, said rescinding Rule 611 could affect long-running debates over exchange design, including asymmetric speed bumps.

Speed bumps are delays used by some trading venues to reduce the advantage of ultra-fast market participants. Asymmetric speed bumps treat different order types or market participants differently, which has made them contentious in the US market structure.

Resnick said Rule 611 made those models harder to approve because a venue with an asymmetric speed bump could post tighter quotes than venues without one. If those quotes were included in the consolidated tape, other exchanges could be forced to match prices they could not economically support.

His point underlines why the SEC move is not only about crypto. Rule 611 has influenced how venues compete, how liquidity is displayed, and how firms route orders. Removing it would change the incentives for exchanges and brokers across the equity market.

SEC Chairman Paul Atkins has framed the proposal as an overdue review of a rule he believes created unintended consequences. The agency said the change is intended to simplify market structure, reduce costs, and allow competition and innovation to shape equity trading.

That language has drawn attention from tokenization advocates because it overlaps with the SEC’s broader digital-asset agenda.

Atkins and Commissioner Hester Peirce have previously discussed an innovation exemption that could allow limited experimentation with tokenized securities trading through automated market makers and other on-chain systems.

Such an exemption could include safeguards such as volume limits, whitelisting, and a temporary framework while the agency considers permanent rule changes.

Thorn said the sequencing is important. In his view, the SEC is first seeking to remove one of the hardest market-structure obstacles and then address venue-registration issues through an innovation exemption.

At a high level, he said, the agency appears to be following the “Project Crypto” playbook.

The caveats remain large

Despite this potential rulemaking, the risk for investors is that tokenized stocks can mean many different things.

A token may represent a direct share, a custodial claim, a depositary receipt, a derivative, or a synthetic instrument that tracks a stock price without giving the holder voting rights, dividends, or a claim on the underlying security. Those distinctions matter, even if the token trades at a price close to the public share.

That is why rescinding Rule 611 would not, by itself, legalize tokenized equities. Firms would still need to answer questions about whether the product is registered, where it trades, who holds the underlying asset, how corporate actions are handled, whether investors receive shareholder rights, and how settlement works.

Thorn stated:

“Tokenized NMS stocks still face a host of other questions re: exchange/ATS registration questions, clearance and settlement, and many other rules not designed for defi or peer-to-peer trading.”

In view of this, Anthony Bassilli of Coinbase Asset Management described the SEC proposal as a clearing hurdle for tokenizing stocks in the US, while adding that the process remains important to watch.

That caution is shared by traditional-market groups. SIFMA, the trade group representing broker-dealers, investment banks, and asset managers, welcomed the SEC’s review but warned that the US market structure is made up of many interconnected pieces.

It said regulators should study the effect of any changes on investors, execution quality, transparency, and the development of overnight trading and tokenized securities.

Those concerns are likely to shape the public comment period. Critics may argue that removing Rule 611 could fragment markets, weaken displayed quotes, or make it harder for ordinary investors to know whether they received a fair price.

On the other hand, crypto supporters will argue that best execution, competition, and better market design can replace a rule they view as overly rigid.

Hyperliquid’s rapid growth has drawn a warning from Britain’s financial regulator, adding a consumer-protection concern to a platform increasingly watched by Wall Street and traditional market operators.

The Financial Conduct Authority (FCA) placed Hyperliquid and the Hyper Foundation on its warning list, saying the firm may be providing or promoting financial services in the UK without authorization.

In a May 21 notice, the financial regulator stated:

 “You should avoid dealing with this firm and beware of scams.”

The regulator listed the Hyper Foundation website, the Hyperliquid trading app, and the project’s social media channels under its unauthorized firm details.

It also warned that users would not have access to the Financial Ombudsman Service if they wanted to complain and would not be covered by the Financial Services Compensation Scheme if they lost money.

The notice comes as Hyperliquid expands beyond crypto-native trading into markets that increasingly overlap with traditional finance.

Hyperliquid is a decentralized, non-custodial derivatives exchange that allows users to trade perpetual futures, contracts that offer leveraged exposure without expiration dates.

Over the past year, the platform has become a major part of offshore crypto trading because it allows traders to keep positions open indefinitely while speculating on price movements.

In the UK, crypto derivatives have faced tighter limits since the FCA banned their sale to retail consumers in 2021. The country also expanded financial promotion rules to crypto assets in 2023, requiring firms marketing to UK users to meet stricter standards.

Considering this, Kyle Samani, chairman of Solana treasury company Forward Industries, described the FCA action as the “first of many,” signaling that some investors expect Hyperliquid’s growth to attract more regulatory attention as the platform moves closer to markets watched by traditional finance.

Traditional exchanges bring the fight to Washington

The UK warning came as Hyperliquid was already facing scrutiny from some of the largest operators in US derivatives markets.

Last month, executives from CME Group and Intercontinental Exchange raised concerns with the Commodity Futures Trading Commission (CFTC) over Hyperliquid’s expanding perpetual futures marketplace.

They warned that the platform could pose risks to traditional commodities markets, particularly oil. Their concerns center on whether a decentralized trading venue with limited identity checks could allow traders to manipulate prices, coordinate around market-sensitive information, or evade sanctions.

Furthermore, CME and ICE warned that activity on Hyperliquid could affect global oil benchmarks if state-backed entities or sanctioned actors used the platform to gain exposure outside traditional oversight.

This pushback shows how Hyperliquid’s growth has widened the debate over decentralized finance.

For years, most DeFi platforms competed mainly for crypto liquidity. Hyperliquid’s HIP-3 markets have moved that model closer to traditional finance by allowing synthetic exposure to stocks, commodities, and private companies.

Notably, Hyperliquid said real-world asset open interest on the platform reached a record $3 billion, with HIP-3 setting a new open-interest record each month since its launch in October 2025.

The platform runs continuously, giving traders access to leveraged markets at any hour, including when traditional exchanges are closed.

That structure has helped attract traders seeking to react immediately to earnings, geopolitical developments, policy announcements, and macroeconomic data that can move oil, equities, and private-market sentiment outside standard trading hours.

For CME and ICE, the same structure raises market-integrity concerns. Both exchanges operate under regulatory frameworks that include approved contracts, clearing requirements, surveillance systems, margin rules, and customer-protection standards.

Hyperliquid offers a different model built around public blockchain records, open access, and fewer conventional gatekeepers.

The dispute also carries a commercial edge. If liquidity in commodities, stock indexes, and other traditional assets shifts toward on-chain venues, incumbent exchanges could face pressure from platforms offering lower costs, faster product launches, and round-the-clock trading.

CFTC opens a regulated path for perpetual futures

Despite these concerns from the traditional financial giants, the US regulatory backdrop has been shifting as officials begin creating approved channels for perpetual futures, the product category at the center of Hyperliquid’s growth.

Last month, the CFTC approved Kalshi’s Bitcoin perpetual futures contract for listing on a registered derivatives venue.

The agency also issued policy guidance on perpetual derivatives and 24-hour trading, while staff provided interpretive guidance and no-action relief tied to Coinbase’s access to certain Deribit perpetual products through an affiliate.

The actions show that US regulators are willing to bring perpetual futures into regulated markets when they are offered through approved venues and subject to existing oversight.

That shift is important for Hyperliquid because perpetual futures remain central to its exchange activity and to the wider offshore crypto derivatives market.

It also changes the competitive landscape. Regulated firms such as Kalshi and Coinbase now have clearer routes to serve US customers through recognized market infrastructure.

Hyperliquid remains outside that framework and blocks US residents from direct access.

Still, the Hyperliquid Policy Center welcomed the CFTC’s actions, saying they marked a long-overdue acknowledgment that perpetual derivatives can support price discovery and risk management.

The group said years of regulatory uncertainty had pushed the market offshore and weakened US competitiveness in global derivatives.

The organization also pushed back against claims that Hyperliquid’s structure makes misconduct easier. It said the platform publishes a complete on-chain record of every transaction in real time, creating a transparent environment for surveillance, detection, and investigation by regulators and law enforcement.

“Hyperliquid offers enhanced market transparency,” the group said, adding that continuous trading improves price discovery because markets move whether legacy exchanges are open or closed.

The response reflects the main argument from Hyperliquid’s supporters: onchain markets can offer a more open and efficient structure, with public records replacing parts of the reporting and surveillance systems used by traditional exchanges.

Former Boston Fed President Eric Rosengren has pointed to a broader move toward lower-cost, 24-hour trading of financial assets.

He said liquidity is moving toward decentralized exchanges and away from more expensive centralized venues, echoing Hyperliquid’s appeal to professional traders seeking speed, access, and lower friction.

According to him:

“Hyperliquid has an active market for many commodities, stocks, pre-ipo stocks, as well as crypto. The gold, silver, and oil markets have been active on weekends given the administration’s tendency to make announcements over the weekend. 24-7 exchanges means 24-7 trading.”

Hyperliquid faces difficult paths from here

Market observers noted that the regulatory pressure leaves Hyperliquid with a harder question of how much of its current model can survive if the platform wants deeper access to regulated markets.

Derek Edwards, managing partner of venture capital firm Collab Currency, said Hyperliquid is a “killer product,” but faces several constraints if it wants to reach US users and institutions more directly.

He outlined five possible paths for the firm, which include remaining offshore, building a regulated US wrapper, decentralizing further under market-structure legislation, centralizing into a more conventional corporate exchange, or lobbying for a bespoke regulatory framework.

However, none of these paths offers an easy route.

According to Edwards, remaining offshore would allow Hyperliquid to preserve its current product and continue serving global crypto traders. It would also leave US institutional demand to regulated firms that can offer perpetual futures through approved venues.

Meanwhile, a regulated US wrapper could give Hyperliquid a way into the world’s largest capital market, but that structure would likely require separate customer funds, narrower product listings, and a compliance framework distinct from the global platform.

However, US futures rules would make it difficult to mix domestic customer collateral with offshore protocol margin, while approved products would probably focus on deeper, more liquid contracts rather than Hyperliquid’s broader range of markets.

Edwards noted that this approach could also complicate HYPE’s economics. If revenue from a regulated corporate venue flowed into token buybacks, burns, or assistance-fund mechanics, regulators could examine whether token holders were participating in the profits of an operating business.

That would bring additional securities-law questions around the token.

Meanwhile, a deeper decentralization push could help Hyperliquid address some token-classification issues under proposed market-structure legislation such as the CLARITY Act.

That path would likely require broader validator participation, more decentralized listings, reduced emergency discretion, and slower governance-led upgrades.

Those changes would carry a strategic cost. Much of Hyperliquid’s growth has come from fast product decisions, tight execution, and the ability to launch markets quickly. More decentralized governance could strengthen the regulatory argument while reducing the speed at which the platform gains market share.

However, a more centralized structure would give regulators a clearer corporate counterparty, but it could weaken the network thesis around HYPE as a token tied to protocol activity.

Lastly, lobbying for a tailored framework may offer another route as the CFTC becomes more open to perpetual futures and 24-hour trading, though that process could take time and still leave unresolved questions around token classification and derivatives rules.