Galaxy Digital filed a letter with the SEC’s Crypto Task Force this week, arguing that automated market makers (AMMs) should be allowed to trade tokenized securities without registering as exchanges.
The submission directly challenges positions taken by SIFMA, the lobbying group that represents traditional Wall Street broker-dealers.
Galaxy Says AMMs Fall Outside Exchange Rules
In its filing, Galaxy Digital laid out why AMMs that meet specific criteria should not qualify as “exchanges” under the Securities Exchange Act of 1934.
The firm pointed to features like deterministic settlement, full transparency, non-discriminatory access, and the absence of discretionary control.
Galaxy also argued that liquidity providers on these platforms are not “dealers” because they trade for their own accounts, have no customers, and do not solicit orders.
The firm proposed a conditional innovation exemption that would include whitelisting, volume caps, and required disclosures to preserve market integrity.
The letter frames the debate as a structural question about whether tokenized stocks should move through decentralized protocols or remain confined to traditional market infrastructure.
SIFMA has pushed to keep these assets within legacy systems, a position Galaxy described as inconsistent with the SEC’s own technology-neutral stance.
Broader Regulatory Shift
The filing arrives as the SEC expands its pro-crypto posture. The agency launched Project Crypto earlier this year to bring capital markets onto blockchain rails.
In March 2026, the SEC and CFTC issued a joint taxonomy classifying digital assets into five categories, including tokenized securities.
Galaxy itself became the first NASDAQ-listed company to tokenize its equity on a public blockchain, with a shareholder vote planned for May 2026 through Broadridge’s governance platform on Avalanche.
Whether the SEC sides with Galaxy or SIFMA on AMM classification may determine how tokenized equity markets develop for years to come.
