Bitcoin Won. Wall Street Fights Tokenized Stocks Next: Galaxy

Are banks really pro-crypto? Galaxy’s Alex Thorn exposes how Wall Street lobbyists fight tokenized stocks behind closed doors at SEC.

Wall Street has quietly shifted its battleground. Banks and brokerages now back Bitcoin and crypto publicly. 

Behind closed doors, however, their Washington lobbyists are fighting real crypto integration. 

Galaxy’s Alex Thorn called this out directly. He posted a breakdown of a new letter Galaxy submitted to the SEC, responding to pushback from SIFMA and Citadel on tokenized stocks.

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Wall Street’s “Neutrality” Argument Does Not Hold Up

Thorn says incumbents are leaning on a flawed reading of technology neutrality. Their version demands that on-chain systems mirror every piece of legacy infrastructure. 

Galaxy’s letter pushes back on this. 

Real neutrality, Thorn argues, is about outcomes, not structure. The test is whether investor protection, market integrity, and transparency are achieved. If an on-chain market clears that bar through different means, it qualifies. 

Forcing it to copy old-school intermediaries is not neutrality. It is incumbency protection dressed up in legal language.

AMMs Are Not Exchanges, and LPs Are Not Dealers

Galaxy’s letter takes on two specific claims regulators and incumbents have raised. 

The first is whether qualifying automated market makers count as exchanges. 

Thorn says they do not. An exchange, under the statute, is an organization, association, or group of persons. A qualifying AMM is code. 

Once deployed, no one runs it. No one manages an order book, halts trading, or controls access. It simply runs. Tagging it as an exchange misreads the law.

The dealer classification gets the same treatment. 

Liquidity providers on qualifying AMMs commit their own assets. They have no customers. They do not solicit orders or quote two-sided markets. Moreover, they deposit assets into a pool and earn a share of fees when others trade against it. 

Thorn says that looks far more like an investor using their own balance sheet than a dealer running a business. Even active LPs adjusting their positions are still just trading for themselves.

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Pseudonymity, Transparency, and MEV Concerns Are Overblown

Galaxy’s letter also addresses the fallback objections. 

On pseudonymous wallets, the answer is compliance at regulated access points. Transfer agents can tie approved wallets to verified identities. The architecture does not block KYC. On transparency, Thorn says incumbents have it backwards. 

Public blockchains publish full trading history, pool states, pricing curves, and execution data in real time. That is more transparent than the legacy system, not less. 

On MEV and manipulation, Galaxy says the risks are overstated. MEV is not misuse of non-public information. Larger incidents are avoidable. And if a whitelisted holder misbehaves, their identity can be traced.

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