Galaxy Digital, the cryptocurrency investment firm founded by Mike Novogratz, has reportedly urged the U.S. Securities and Exchange Commission (SEC) to include automated market makers (AMMs) under existing tokenization exemptions, according to sources familiar with the matter. The move could provide regulatory clarity for decentralized finance (DeFi) platforms that rely on AMMs for liquidity.
AMMs, which facilitate trading through algorithmic pricing rather than traditional order books, have become a cornerstone of DeFi. However, their legal status remains uncertain under U.S. securities laws. Galaxy Digital’s push aligns with broader industry efforts to secure favorable regulatory treatment for decentralized trading protocols.
“This is a strategic effort to carve out space for DeFi innovation,” said one analyst familiar with the discussions. “If successful, it could reduce compliance burdens for projects using AMMs.” The SEC has not publicly commented on the request.
Legal experts note that the SEC has historically taken a cautious approach to crypto exemptions. A decision in favor of Galaxy Digital could signal a shift in how regulators view decentralized trading mechanisms. However, some officials remain skeptical, citing concerns about investor protection and market integrity.
If the SEC grants the exemption, it could accelerate the adoption of AMM-based trading in regulated markets. Conversely, a rejection may force DeFi projects to reconsider their operational models in the U.S.