The XRP Ledger is drawing renewed attention after the SEC introduced a temporary regulatory framework that allows certain blockchain-based venues to facilitate tokenized stock trading through automated market makers.
The SEC’s September 17 order provides conditional relief for eligible Tokenized Securities Venues to use permissioned AMM liquidity pools when trading tokenized U.S. stocks. The decision does not specifically reference XRP, Ripple or XRPL, but it establishes rules under which qualifying platforms can operate onchain markets.
The development is notable for the XRP ecosystem because XRPL already supports native automated market makers. The ledger activated its XLS-30 AMM amendment on March 22, 2024, adding liquidity pools to its existing decentralized exchange.
Under the SEC’s Innovation Exemption, eligible venues receive temporary relief from certain securities requirements. The framework permits AMMs and liquidity pools to connect buyers and sellers of tokenized National Market System stocks, provided participating platforms meet specified conditions.
The exemption is not a broad authorization for tokenized equities across the crypto industry. Venues must operate permissioned systems and satisfy investor protection requirements established by the SEC.
Tokenized versions of stocks must also maintain the same rights and privileges as their corresponding traditional securities. These include shareholder rights such as dividends and voting.
The rules also give the original stock issuer an opportunity to object when another party tokenizes its shares. Furthermore, trading in a tokenized stock must stop if the underlying security is halted on its primary listing exchange.
For the digital-asset sector, the SEC’s recognition of AMM liquidity pools as part of a potential onchain securities market is one of the more notable elements of the order.
Certain liquidity providers supplying tokenized securities to eligible pools can also receive conditional relief under the framework. The exemptions are set to remain in effect for five years, providing regulators with time to assess how tokenized securities markets develop.
Why XRPL’s AMM Is Relevant
The regulatory shift has renewed interest in the XRP Ledger because its AMM infrastructure is already operational.
XRPL introduced the functionality through the XLS-30 amendment, which went live on Mainnet on March 22, 2024. Unlike AMMs deployed through separate applications, XRPL’s system is built into the ledger’s decentralized exchange.
Users can create liquidity pools for different asset pairs, supply liquidity and receive LP tokens representing their positions. XRPL’s DEX can also combine order-book and AMM liquidity when executing transactions, selecting the available route that offers a better exchange rate.
That design could become increasingly relevant if tokenized securities gain wider adoption on public blockchains.
Still, the SEC’s order does not authorize tokenized stocks specifically on XRPL. The Innovation Exemption is technology-neutral and establishes requirements for eligible venues rather than approving individual blockchain networks.
As a result, the potential significance for XRP is primarily connected to XRPL’s existing infrastructure rather than a newly approved use case for the token.
If regulated tokenized equity markets eventually expand to public blockchains, networks with established AMM and DEX capabilities could provide a ready technical base. XRPL already has both components.
Whether financial institutions ultimately use public networks such as XRPL for tokenized stocks remains an open question. The SEC has created a framework that accommodates AMM-based trading, but actual adoption will depend on decisions made by financial firms, market operators and issuers.
For now, the development represents a regulatory opening that could increase the relevance of XRPL’s existing AMM technology as tokenized assets continue to develop, rather than a direct SEC endorsement of XRP or the XRP Ledger.
