CTF Written Submission

Re: Automated Market Makers, Tokenized Securities, and Technology Neutrality

April 14, 2026
  • AMMs that meet defined criteria (no discretionary control, full transparency, deterministic settlement, non‑discriminatory access) are not “exchanges” under the Exchange Act because they lack an organization or group of persons operating or maintaining a marketplace, and do not perform functions traditionally associated with stock exchanges.
  • Liquidity Providers on such AMMs are not “dealers” under the statutory dealer–trader distinction, as they trade solely for their own accounts, have no customers, and do not solicit orders or provide two‑sided quotes, making dealer registration requirements inapplicable.
  • The SEC could lawfully permit tokenized‑securities trading on AMMs by adopting a conditional innovation exemption, including whitelisting, volume caps, and required disclosures, to ensure market integrity while enabling compliant tokenization architectures. 

Last Reviewed or Updated: April 14, 2026