XRP News: SEC AMM Move Aligns With XRPL’s Tokenized Asset Capabilities

The XRP Ledger is receiving renewed attention after the SEC established a temporary framework that could allow certain blockchain-based venues to facilitate tokenized stock trading through automated market makers.

In a September 17 decision, the SEC introduced an Innovation Exemption for qualifying Tokenized Securities Venues. The relief allows eligible platforms to use permissioned AMM liquidity pools when facilitating trades in tokenized U.S. stocks, subject to specific regulatory conditions.

The order does not specifically identify XRP, Ripple or the XRP Ledger. Instead, it creates a technology-neutral framework for eligible venues that want to operate onchain markets for tokenized National Market System securities.

The development is particularly notable for XRPL because the network already has native AMM functionality. Its XLS-30 amendment became active on Mainnet on March 22, 2024, adding liquidity pools directly to the XRP Ledger’s existing decentralized exchange.

The SEC’s framework provides temporary relief from certain securities requirements, but it does not represent unrestricted approval for tokenized stocks across crypto markets. Eligible venues must use permissioned systems and follow investor protection requirements.

Tokenized shares must preserve the same rights and privileges as their traditional counterparts, including shareholder benefits such as dividends and voting rights.

The framework also allows an original stock issuer to object if a third party attempts to tokenize its shares. In addition, trading in the tokenized version must be halted when trading in the underlying stock is suspended on its primary listing exchange.

For the crypto sector, the SEC’s explicit inclusion of AMM liquidity pools in an onchain securities trading framework could prove significant. The order also provides conditional relief to certain liquidity providers that supply tokenized securities to qualifying pools.

The exemptions are scheduled to remain effective for five years, giving regulators time to evaluate the development and operation of tokenized securities markets.

XRPL’s AMM Could Become More Relevant

The SEC’s decision has naturally raised questions about blockchain networks that already have native AMM infrastructure, including the XRP Ledger.

XRPL introduced its AMM through the XLS-30 amendment, which went live on March 22, 2024. The system is integrated into the ledger’s decentralized exchange, allowing users to create asset-pair liquidity pools, provide liquidity and receive LP tokens representing their positions.

XRPL’s DEX can also use both order-book and AMM liquidity when processing transactions. The network can select the available trading route that offers a more favorable exchange rate.

That existing infrastructure could be useful if regulated tokenized securities eventually expand to public blockchains.

However, the SEC’s decision does not approve XRPL for tokenized stock trading. The Innovation Exemption is technology-neutral and establishes conditions for eligible venues rather than approving individual blockchain networks.

For XRP holders, the potential significance is therefore tied to XRPL’s existing capabilities rather than a direct regulatory endorsement of XRP.

If tokenized equity markets move further onto public blockchains, networks with established DEX and AMM infrastructure may have a technical starting point for supporting those markets. XRPL already offers both.

The key question is whether financial institutions and tokenized-asset platforms will ultimately choose public networks such as XRPL. The SEC has provided a framework that accommodates AMM-based markets, but actual adoption will depend on decisions by issuers, financial firms and market operators.

For now, the development highlights how XRPL’s existing AMM architecture could become increasingly relevant as regulators and financial institutions explore the next stage of tokenized asset markets.