The XRP Ledger is gaining fresh attention following an SEC decision that creates a temporary pathway for certain blockchain-based venues to use automated market makers when trading tokenized stocks.

On September 17, the SEC issued an Innovation Exemption covering eligible Tokenized Securities Venues. The framework allows qualifying platforms to use permissioned AMM liquidity pools for tokenized U.S. equities while operating under specific regulatory and investor protection conditions.

The order does not specifically mention XRP, Ripple or the XRP Ledger. Instead, it establishes a technology-neutral framework for eligible venues seeking to facilitate onchain markets for tokenized National Market System stocks.

The decision is nevertheless relevant to XRPL because the network already has a native AMM. The XLS-30 amendment went live on the XRP Ledger Mainnet on March 22, 2024, integrating liquidity pools with the ledger’s existing decentralized exchange.

The SEC’s exemption provides temporary relief from certain securities rules, but it does not constitute unrestricted approval for tokenized stocks throughout the crypto industry. Participating venues must operate permissioned systems and comply with requirements designed to protect investors.

Under the framework, tokenized shares must retain the same rights and privileges as their corresponding traditional securities. These include rights such as receiving dividends and participating in shareholder votes.

The rules also give the original issuer an opportunity to object if a third party tokenizes its shares. Trading in a tokenized stock must additionally be suspended when trading in the underlying security is halted on its primary listing exchange.

Another important element is the SEC’s recognition of AMM liquidity pools within an onchain securities trading model. The order also provides conditional relief for certain liquidity providers that supply tokenized stocks to qualifying pools.

The exemptions are scheduled to remain in place for five years, allowing regulators to observe how tokenized securities markets evolve and how these trading structures operate in practice.

XRPL Already Has Native AMM Infrastructure

The regulatory development puts additional focus on the XRP Ledger’s existing AMM capabilities.

XRPL activated its native AMM through the XLS-30 amendment on March 22, 2024. The functionality is built directly into the ledger’s decentralized exchange rather than relying on a separate application operating above the network.

Participants can create liquidity pools for asset pairs, contribute funds and receive LP tokens representing their liquidity positions.

The XRP Ledger’s DEX can also draw on both order-book and AMM liquidity when processing trades. This allows transactions to use the available route that provides the more favorable exchange rate.

That existing architecture could become relevant if regulated tokenized securities eventually expand onto public blockchain networks.

However, the SEC order should not be interpreted as approval for tokenized stocks to operate on XRPL. The exemption is technology-neutral and applies to qualifying Tokenized Securities Venues, not specific blockchain networks.

For XRP holders, the potential impact therefore centers on the XRP Ledger’s infrastructure rather than an immediate regulatory approval or new utility for XRP itself.

If tokenized equity markets increasingly move onchain, financial firms could look toward networks that already provide functioning AMMs and decentralized exchanges. XRPL has both capabilities in place.

Whether institutions choose XRPL or other public blockchains for these markets remains uncertain. The SEC has provided a framework that recognizes AMM-based trading, but market participants will determine whether that framework leads to meaningful adoption.

For now, the development represents a regulatory change that could make XRPL’s existing AMM infrastructure more relevant to tokenized assets, rather than a direct endorsement of XRP by the SEC.