Mike Novogratz’s Galaxy Digital says automated market makers (AMMs) will not be “exchanges” underneath the Alternate Act and liquidity suppliers on such AMMs will not be “sellers” underneath the statutory dealer-trader distinction. The crypto agency urges the US SEC to allow tokenized securities buying and selling on AMMs underneath the innovation exemption framework.
Galaxy Digital Urges SEC to Present Clear Guidelines for Tokenized Securities Buying and selling on AMMs
Galaxy Digital submitted a letter to the US SEC Crypto Activity Drive relating to automated market makers, tokenized securities, and know-how neutrality. This is available in response to opposite viewpoints by SIFMA.
Galaxy Digital explains why AMMs will not be “exchanges” and liquidity suppliers will not be “sellers,” as outlined underneath the Securities Alternate Act of 1934. It additionally claims that the regulatory insurance policies and objectives superior by the Alternate Act and the foundations thereunder will not be undermined consequently.
The agency urges the SEC to offer a transparent pathway for tokenized securities buying and selling on AMMs. The agency proposes including such AMMs underneath the innovation exemption framework.
Which AMMs and Liquidity Suppliers Ought to Not Be Underneath the Alternate Act?
Galaxy Digital claims that AMMs that meet outlined standards will not be “exchanges” underneath the Alternate Act. These embody no discretionary management, full transparency, deterministic settlement, and non‑discriminatory entry.
Furthermore, liquidity suppliers on these AMMs will not be “sellers” underneath the Alternate Act. The agency claims that they commerce solely for their very own accounts, haven’t any prospects, and don’t even solicit orders or present two‑sided quotes. This makes seller registration necessities irrelevant.
The agency pushes the SEC to undertake a conditional innovation exemption, together with whitelisting, quantity caps, and required disclosures. It should guarantee market integrity whereas enabling compliant tokenization architectures.
As CoinGape earlier reported, the US SEC outlined circumstances underneath which DeFi platforms that function by means of coated consumer interfaces could also be exempt from registering as broker-dealers.
This might possible embody aid for tokenized securities buying and selling by means of automated market makers (AMMs) and different decentralized functions.
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