XRP is back in focus as a recent SEC decision could give blockchain-based markets a clearer route for trading tokenized stocks through automated market makers.
On September 17, the SEC granted a temporary exemption allowing certain blockchain venues to facilitate trading in tokenized U.S. stocks through permissioned AMM liquidity pools. The decision does not name XRP, Ripple or the XRP Ledger, but it introduces a framework for Tokenized Securities Venues that could support AMM-based markets under defined conditions.
The development is notable for the XRP ecosystem because XRPL already has native AMM functionality. Its XLS-30 amendment went live on Mainnet on March 22, 2024, bringing liquidity pools directly into the ledger’s decentralized exchange infrastructure.
The SEC’s Innovation Exemption provides temporary relief from selected securities requirements for qualifying Tokenized Securities Venues. Eligible platforms can use AMMs and liquidity pools to facilitate transactions involving tokenized National Market System stocks.
The relief comes with several restrictions. Participating venues must use permissioned systems and meet investor protection standards set out by the regulator.
Tokenized stocks must also preserve the same rights and privileges attached to their traditional counterparts. Those protections include shareholder rights such as dividends and voting.
The framework further allows the original issuer of a stock to object to third-party tokenization of its shares. Trading of the tokenized security must also be halted if trading in the underlying stock is suspended on its primary exchange.
For the crypto industry, the SEC’s acknowledgment that AMM liquidity pools can form part of an onchain securities trading system is particularly significant.
The order also provides conditional relief to certain liquidity providers that supply tokenized stocks to eligible pools. The exemptions will remain available for five years, allowing regulators to monitor the development of tokenized securities markets.
XRPL’s Existing AMM Infrastructure
The SEC development has naturally brought attention to the XRP Ledger’s existing AMM capabilities. XRPL introduced its native AMM through XLS-30, which became active on March 22, 2024.
The AMM is integrated directly into the XRP Ledger’s decentralized exchange rather than operating as an external application. Participants can create asset-pair liquidity pools, provide liquidity and receive LP tokens representing their holdings.
XRPL’s documentation also explains that its DEX can combine traditional order-book liquidity with AMM liquidity when executing trades. The system can therefore select the available route offering the more favorable exchange rate.
That architecture could become increasingly relevant if regulated tokenized securities begin expanding across public blockchain networks.
However, the SEC’s decision does not mean tokenized stocks have been approved for trading on XRPL. The Innovation Exemption is technology-neutral and applies to qualifying Tokenized Securities Venues rather than granting approval to individual blockchain networks.
For XRP, the potential importance of the decision therefore lies primarily in the XRP Ledger’s infrastructure.
Should regulated tokenized equity markets eventually move onto public blockchains, networks that already have functioning DEX and AMM systems could have an existing technical foundation for supporting those markets. XRPL already offers both.
The key issue now is whether financial institutions and market operators will actually choose public networks such as XRPL for tokenized equities. The SEC has established a framework that accommodates AMM-based trading, but adoption will ultimately depend on how the industry responds.
For now, the development represents a regulatory shift that could make XRPL’s existing AMM architecture more relevant to the growing tokenized-asset market, rather than a direct SEC endorsement of XRP or the XRP Ledger.
