The push to bring onchain trading into U.S. equity market structure is no longer a side conversation. Hyperliquid Policy Center and Douro Labs, a core contributor to Pyth Network, have asked the U.S. Securities and Exchange Commission to repeal Rule 611 under Regulation NMS, the trade-through rule that has shaped how U.S. stock orders are routed for decades. According to the original report, the joint comment letter argues the rule was designed around centralized quotations and the National Best Bid and Offer framework, a structure that does not map well onto automated market makers, onchain order books, or markets that never close.
The argument is more precise than a blanket complaint about legacy regulation. Rule 611 generally requires brokers to route orders to the market displaying the best price, preventing a trade from being executed at an inferior quote. That logic depends on an NBBO that consolidates displayed liquidity from regulated exchanges and a shared trading calendar. Onchain venues do not produce the same kind of consolidated quotation, and their continuous operation means the very concept of a best price shifts constantly across pools and chains.
A Market Rule Built for Another Era
HPC’s letter frames this as a mismatch between the SEC’s existing toolbox and the mechanics of decentralized execution. The trade-through rule assumed a world of lit central limit order books, specialist quotes, and synchronized sessions. In a 24/7 environment with AMMs, there is no single national best bid and offer to enforce, and forcing one into that framework would distort how liquidity actually clears.
Onchain venues rely on continuous liquidity pools, and execution quality can shift with chain activity. Recent developer activity rankings show how concentrated building remains across a handful of networks, which means reference prices and routing logic also vary by ecosystem. That mismatch carries costs for more than just trading venues. Brokers and market makers face compliance uncertainty when deciding whether an onchain execution can satisfy their duty of best execution. The HPC letter asks the SEC to address that directly if Rule 611 is repealed, rather than leaving intermediaries to guess.
Best Execution Without a Consolidated Quote
One of the more concrete proposals in the letter is to allow transparent and manipulation-resistant independent reference prices where NBBO is not applicable, including onchain price feeds such as Pyth. That would give brokers a workable alternative to a centralized consolidated tape while preserving the core policy goal of protecting orders from inferior prices.
This is not simply a crypto-native ask. Best execution obligations have been a major pressure point in traditional equities litigation and enforcement. The question is whether an independently verifiable oracle price can provide the same kind of audit trail that regulators have historically demanded from displayed exchange quotes. Douro Labs’ involvement with Pyth suggests the answer could be built around onchain pricing infrastructure, but the SEC has not embraced that substitute.
Tokenized Equities Stay in the Old Framework
Notably, HPC does not argue for a blanket exemption for all tokenized securities. The letter says tokenized U.S. equities should remain subject to Regulation NMS and existing best-execution requirements. That distinction matters because the tokenization market has been expanding rapidly. A recent tokenization roundup tracked the sector crossing $20 billion onchain and major institutions settling tokenized Treasuries, so the regulatory line between traditional securities and onchain markets is becoming harder to avoid.
The carve-out also signals a more careful lobbying position. HPC is not asking the SEC to abandon investor protections for tokenized equity products; it is asking for a different compliance path for native onchain trading systems. That could make the proposal more acceptable to regulators who remain focused on retail protection.
What the SEC Still Has to Resolve
Even if the trade-through rule is repealed, the harder work is in defining how brokers can demonstrate best execution when routing to onchain markets. The comment letter opens that question but does not resolve it. The SEC would need to determine what counts as a reliable reference price, what manipulation-resistant means in practice, and who bears liability when an onchain execution diverges from a later reference feed.
The letter arrives amid broader tension over how Washington treats digital asset market infrastructure. Banking interests were already working to reshape major crypto legislation before a Senate vote, and the SEC’s approach to market structure remains a separate but connected fight. For anyone building onchain trading systems, the Rule 611 question is less about deregulation than about getting a coherent framework in place before tokenized equities and crypto-native order books grow further into the same regulatory space.
The open issue is whether the SEC uses this comment period to modernize execution rules or simply leaves the existing structure in place. That decision will determine whether brokers can rely on onchain price feeds as a compliance tool or keep treating decentralized venues as too risky for institutional order flow.
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