Mike Novogratz’s Galaxy Digital says automated market makers (AMMs) are not “exchanges” under the Exchange Act and liquidity providers on such AMMs are not “dealers” under the statutory dealer-trader distinction. The crypto firm urges the US SEC to permit tokenized securities trading on AMMs under the innovation exemption framework.
Galaxy Digital Urges SEC to Provide Clear Rules for Tokenized Securities Trading on AMMs
Galaxy Digital submitted a letter to the US SEC Crypto Task Force regarding automated market makers, tokenized securities, and technology neutrality. This comes in response to contrary viewpoints by SIFMA.
Galaxy Digital explains why AMMs are not “exchanges” and liquidity providers are not “dealers,” as defined under the Securities Exchange Act of 1934. It also claims that the regulatory policies and goals advanced by the Exchange Act and the rules thereunder are not undermined as a result.
The firm urges the SEC to provide a clear pathway for tokenized securities trading on AMMs. The firm proposes adding such AMMs under the innovation exemption framework.
Which AMMs and Liquidity Providers Should Not Be Under the Exchange Act?
Galaxy Digital claims that AMMs that meet defined criteria are not “exchanges” under the Exchange Act. These include no discretionary control, full transparency, deterministic settlement, and non‑discriminatory access.
Moreover, liquidity providers on these AMMs are not “dealers” under the Exchange Act. The firm claims that they trade solely for their own accounts, have no customers, and do not even solicit orders or provide two‑sided quotes. This makes dealer registration requirements irrelevant.
The firm pushes the SEC to adopt a conditional innovation exemption, including whitelisting, volume caps, and required disclosures. It will ensure market integrity while enabling compliant tokenization architectures.
As CoinGape earlier reported, the US SEC outlined conditions under which DeFi platforms that operate through covered user interfaces may be exempt from registering as broker-dealers.
This could likely include relief for tokenized securities trading through automated market makers (AMMs) and other decentralized applications.
Also Read: Best RWA Tokenization Compliance Companies & Platforms in 2026
Source: https://coingape.com/galaxy-digital-pushes-sec-to-add-amms-under-tokenization-exemption/
