The SEC’s Regulation Crypto Assets will create needed pathways for digital securities primary issuance, but regulated secondary markets will remain impossible without the agency rescinding Rule 611, the Order Protection Rule. More on this rule and its relevance to crypto: Rule 611 under SEC Regulation NMS prevents any venue for US equities or equity options from matching trades at a worse price than a protected quote on another venue. A protected quote is a round-lot firm order at top-of-book on a lit national securities exchange. Before 611 was established, floor brokers with access to quotations on multiple exchanges could provide inferior pricing to clients. The rule accelerated the migration to fully automated execution and led to today’s competitive ecosystem of 17 lit equities exchanges, 18 lit options exchanges, and over 80 darkpool ATSs and single dealer platforms. Major market participants have grown more critical of 611 in recent years. To comply with order routing rules, exchanges and broker-dealers pay market data and connectivity fees to the growing list of NMS exchanges. Large orders that can’t be filled on one exchange get broken up slowly and suffer price impact before routing is complete. The protections are less needed in an environment where HFTs already maintain price equilibria between exchanges through arbitrage. The new proposal for SEC Regulation Crypto Assets would create a safe harbor for primary issuance of digital securities, but doesn’t address how secondary markets can develop in light of the Order Protection Rule. An ATS or on-chain venue listing a token could not comply with the rule without NMS venues listing the asset, establishing a canonical NBBO, and facilitating on/off-chain hybrid routing. The SEC proposed rescinding the Order Protection Rule in June. Doing so would provide a clearer path for digital securities trading, but introduce significant disruption and unknown impact on equity and equity options markets.