CTF Written Submission

Re: A Legal Basis for Interpreting the Definition of an Exchange to Exclude a Decentralized Exchange Operating an Automated Market Maker

April 3, 2025
  • The Securities Exchange Act of 1934's definition of an "exchange" does not extend to decentralized exchanges (DEXs) operating automated market makers (AMMs) because peer-to-peer transaction protocols do not resemble traditional stock exchanges.
  • Registration and regulation frameworks intended for stock exchanges are incompatible with DEXs and fail to provide adequate investor protections for using a DEX.
  • Congress should amend the Exchange Act to provide tailored regulatory oversight of securities transactions on DEXs.

Last Reviewed or Updated: April 3, 2025