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Mike Novogratz\u2019s Galaxy Digital says automated market makers (AMMs) should not \u201cexchanges\u201d beneath the Exchange Act and liquidity suppliers on such AMMs should not \u201cdealers\u201d beneath the statutory dealer-trader distinction. The crypto agency urges the US SEC to allow tokenized securities buying and selling on AMMs beneath the innovation exemption framework.<\/p>\n
Galaxy Digital submitted a letter<\/a> to the US SEC Crypto Task Force relating to automated market makers, tokenized securities, and know-how neutrality. This is available in response to opposite viewpoints by SIFMA.<\/p>\n Galaxy Digital explains why AMMs should not \u201cexchanges\u201d and liquidity providers<\/a> should not \u201cdealers,\u201d as outlined beneath the Securities Exchange Act of 1934. It additionally claims that the regulatory insurance policies and targets superior by the Exchange Act and the foundations thereunder should not undermined because of this.<\/p>\n The agency urges the SEC to present a transparent pathway for tokenized securities buying and selling on AMMs. The agency proposes including such AMMs beneath the innovation exemption framework.<\/p>\n Galaxy Digital claims that AMMs that meet outlined standards should not \u201cexchanges\u201d beneath the Exchange Act. These embrace no discretionary management, full transparency, deterministic settlement, and non\u2011discriminatory entry.<\/p>\n Moreover, liquidity suppliers on these AMMs should not \u201cdealers\u201d beneath the Exchange Act. The agency claims that they commerce solely for their very own accounts, haven’t any clients, and don’t even solicit orders or present two\u2011sided quotes. This makes vendor registration necessities irrelevant.<\/p>\n The agency pushes the SEC to undertake a conditional innovation exemption, together with whitelisting, quantity caps, and required disclosures. It will guarantee market integrity whereas enabling compliant tokenization architectures.<\/p>\n As CoinGape earlier reported, the US SEC outlined circumstances beneath which DeFi platforms that function via coated consumer interfaces could also be exempt from registering as broker-dealers<\/a>.<\/p>\n This might probably embrace aid for tokenized securities buying and selling via automated market makers (AMMs) and different decentralized purposes.<\/p>\n Also Read: <\/strong>Best RWA Tokenization Compliance Companies & Platforms in 2026<\/a><\/p>\n<\/p><\/div>\nWhich AMMs and Liquidity Providers Should Not Be Under the Exchange Act?<\/h2>\n