Blockchain Association Supports SEC Plan to Revise NMS Framework

The Blockchain Association has publicly backed a Securities and Exchange Commission proposal to eliminate certain longstanding National Market System rules. The association contends that these rules, designed for traditional equity markets, create unnecessary friction for tokenized securities and related settlement processes. The statement highlights how tokenization can enable faster reconciliation and broader access to assets such as treasuries and private credit. This position reflects ongoing industry efforts to align legacy market infrastructure with distributed ledger capabilities. The announcement was reported by The Block on the referenced date.

The Blockchain Association functions as a trade organization representing companies active in digital asset markets and policy advocacy. The SEC serves as the primary federal regulator overseeing securities issuance, trading, and settlement in the United States. The National Market System, established under the Securities Acts Amendments of 1975, sets standards for quote dissemination, order protection, and trade reporting across exchanges and alternative venues. These frameworks were built for continuous auction markets in equities and do not directly address on-chain issuance or atomic settlement. Understanding these roles clarifies why revisions are viewed as relevant to tokenization initiatives.

Mechanics of the Proposed Rule Changes

The SEC proposal targets specific NMS provisions that mandate particular order routing, best-execution reporting, and quote display requirements originally calibrated for centralized exchanges. Removing or modifying these elements could permit alternative matching mechanisms that incorporate blockchain-based atomic settlement and programmable compliance checks. Tokenized instruments often rely on smart-contract logic to enforce transfer restrictions and ownership records, features that current NMS constructs do not accommodate. The Blockchain Association letter emphasizes that outdated routing obligations may discourage broker-dealers from integrating on-chain venues. Such adjustments would affect how orders in tokenized treasuries or equity representations are processed and reported.

Implementation would likely involve updated interpretations of Regulation NMS and related exemptive relief for pilot programs. Market participants could then explore hybrid models combining traditional broker intermediation with ledger-based custody and transfer. This shift would require coordination between registered transfer agents, broker-dealers, and blockchain operators to maintain audit trails and investor protections. The association notes that tokenization benefits, including reduced settlement cycles and improved transparency, depend on regulatory relief from legacy constraints. Without such changes, firms may continue to operate tokenized products through off-chain wrappers that limit efficiency gains.

Market Implications for Tokenized Assets

The endorsement signals growing institutional interest in regulatory pathways that accommodate tokenized funds, treasuries, and private credit on public or permissioned ledgers. Entities such as BlackRock, Franklin Templeton, and Ondo have already launched or partnered on products that rely on compliant token issuance and secondary trading. Revising NMS rules could reduce operational overhead for platforms seeking to list these instruments alongside conventional securities. It may also influence infrastructure providers handling oracle feeds, compliance layers, and cross-chain settlement. Broader adoption would depend on consistent treatment across jurisdictions and continued engagement with regulators on custody and investor safeguards.

Prior regulatory actions provide context for the current discussion. The SEC has previously granted limited relief for blockchain settlement pilots and issued guidance on digital asset securities. Other jurisdictions, including the Monetary Authority of Singapore and the European framework under MiCA, have advanced dedicated rules for tokenized instruments and settlement finality. In contrast, the U.S. approach has relied on case-by-case interpretations and existing securities statutes. The Blockchain Association position aligns with calls from market participants for structural updates rather than incremental exemptions. These precedents illustrate differing paces of adaptation across regulatory regimes.

The association argues that modernizing NMS rules will facilitate tokenized asset trading.

Regulatory Outlook and Next Steps

The SEC will need to evaluate public comments and determine whether formal rulemaking or further guidance is warranted. Any final action would likely include transition periods for market participants to adjust systems and compliance programs. Stakeholders such as Securitize, Backed Finance, and Chainlink may monitor developments for impacts on issuance platforms and data integrity tools. Additional clarity on how revised rules interact with existing broker-dealer and transfer-agent obligations will be required. Observers should track subsequent SEC releases, industry comment letters, and potential pilot program announcements.

The Blockchain Association statement underscores a measured industry push to align legacy market rules with tokenization capabilities. Regulatory updates in this area could affect settlement efficiency and operational models for tokenized treasuries and equities without altering core investor protections. Continued dialogue between trade groups, the SEC, and market infrastructure providers will shape practical outcomes. Market participants are advised to review official SEC materials for precise requirements and timelines.